UK shares rise on Israel-Iran ceasefire relief
London stocks climbed on Tuesday in broad-based gains after a ceasefire between Israel and Iran came into effect, ending a 12-day conflict that temporarily spiked oil prices and dampened investor risk sentiment.
The internationally focussed FTSE 100 rose 0.4% by 1000 GMT, while the domestically focussed FTSE 250 midcap index gained 0.9% to touch a more than one-week high.
Travel and leisure stocks led sectoral gains, boosted by airline stocks, as oil prices dropped to their lowest in two weeks.
British airways owner IAG and Easyjet surged more than 5%, while midcap constituents Wizz Air and Jet2 added 3.1% and 3.2%, respectively.
Cruise operator Carnival rose 5.6% to the top of the mid-cap index. Hotel chain operators Intercontinental Hotels and Whitbread gained about 2% each.
However, the truce, announced hours earlier by U.S. President Donald Trump, remained shaky with the Israeli Defence Minister saying he had ordered new strikes in response to Iran's ceasefire violation. Tehran declined the charge.
Crude prices fell on the ceasefire news and weighed on energy giants BP and Shell, which dropped 4.2% and 2.6%, respectively.
Precious metals miners also declined 2.2% tracking a slide in prices of gold, which is often seen as a safe-haven asset.
In company news, AstraZeneca's treatment for lung cancer Datroway with its partner Daiichi Sankyo was approved in the U.S., sending shares of the drugmaker as much as 1.4% in early trading.
On the data front, a private survey showed that grocery price inflation had risen to its highest level since March, while a separate report indicated manufacturers this month reported the sharpest contraction in orders.
Later in the day, investors will closely assess Bank of England Governor Andrew Bailey and chief economist Huw Pill's remarks for clues on rate cuts. Markets are pricing in the likelihood that the central bank will lower borrowing costs by about 50 basis points by year-end.
In other news, Prime Minister Keir Starmer pledged to boost defence and security spending to 5% of economic output by 2035 in accordance with a NATO members agreement at The Hague.
The aerospace and defense index was marginally higher and has gained 55.5% so far this year, making it among the top performing FTSE sectors this year.
(Reporting by Twesha Dikshit; Editing by Shailesh Kuber)
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