LONDON (ShareCast) - (Sharecast News) - London stocks finished lower on Tuesday as mounting tensions in the Middle East weighed on investor sentiment.
The FTSE 100 index slipped 0.46% to close at 8,834.03 points, while the FTSE 250 declined 0.22% to 21,237.05 points.

In currency markets, sterling was last down 0.6% on the dollar to trade at $1.3497, as it fell 0.26% against the euro, changing hands at €1.1713.

"US president [Donald] Trump leaving the G7 meeting in Canada early, downplaying a ceasefire between Israel and Iran and warning Tehran residents to evacuate, has dampened risk sentiment," said IG chief technical analyst Axel Rudolph.

"European stocks dropped despite German investor morale improving as US indices were also under the cosh amid a fall in retail sales and industrial production.

"The Bank of Japan leaving rates unchanged and signalling a cautious approach to unwinding stimulus by slowing its bond purchase taper prompted little market reaction."

Rudolph noted that ongoing missile attacks between Israel and Iran increased worries of possible supply disruptions, pushing oil and gas prices higher.

"The gold price extended Monday's losses while the silver price rallied amid a slightly stronger US dollar."

Trump warns Tehran as he leaves G7 early, signs trade deal with the UK

At the top of the headlines was US president Donald Trump, who stirred controversy by abruptly leaving the G7 summit in Canada, denying claims by his French counterpart Emmanuel Macron that he was seeking a ceasefire between Israel and Iran.

Trump insisted the departure was unrelated to diplomacy, warning instead that Iran should "give up" and advising civilians to evacuate Tehran.

His remarks added to market unease following recent Israeli air strikes and ongoing tit-for-tat military action.

"Stocks are lower after Trump's abrupt departure from the G7 to monitor events in the Middle East from the White House," said Kathleen Brooks, research director at XTB, earlier.

"This suggests that things could be about to escalate in this conflict.

"[Macron] initially said that Trump was leaving due to a ceasefire ... but that was rebuffed by Trump. This has spooked financial markets."

Despite the turbulence, Trump and UK prime minister Keir Starmer finalised a bilateral trade agreement during the summit.

The deal cut tariffs on car exports and aerospace goods, and exempted UK steel from new US-wide duties.

It marked the first formal trade pact under Trump's 'Liberation Day' tariff regime, which had disrupted global trade earlier in the year.

In the US, economic data disappointed.

Retail sales fell 0.9% in May, marking a second consecutive monthly decline as consumers pulled back after a pre-tariff spending surge.

The slump in motor vehicles and building materials led the decline.

Year-on-year growth also slowed to 3.3%. Industrial production contracted unexpectedly by 0.2% in May, with a fall in utilities output offsetting a modest rebound in manufacturing, which was lifted by motor vehicle output.

Meanwhile, the International Energy Agency (IEA) issued a downbeat medium-term outlook for global oil demand.

The IEA projected global supply to increase by more than five million barrels per day by 2030, outpacing the 2.5 million barrel rise in demand.

Demand growth was expected to peak by 2027, driven by record electric vehicle sales, changes in energy use in the Middle East, and a shift in industrial consumption.

The agency forecast a well-supplied market through the decade, despite geopolitical risks.

In Europe, sentiment among German investors surged.

The ZEW survey index jumped to 47.5 in June, far surpassing expectations, as falling interest rates and improved fiscal outlooks boosted confidence.

It marked a sharp recovery from April's slump, with notable strength across the auto, chemical, and electronics sectors.

In Asia, the Bank of Japan kept its interest rate steady at 0.5% and confirmed a gradual reduction in government bond purchases.

It said it would cut monthly bond buying to ¥3.0trn by March 2026, before easing the pace further through 2027.

The central bank said the aim was to ensure market stability and liquidity while unwinding crisis-era monetary stimulus.

Energy shares buoyed by oil prices, airlines slump

On London's equity markets, BP rose 1.66% and Shell gained 1.37% as higher oil prices buoyed energy shares.

Ashtead climbed 4.15% despite reporting a drop in full-year adjusted pre-tax profit.

"A second consecutive drop in annual profits and a planned second cut in capital expenditure in new equipment from Ashtead both suggest the economic outlook is not as clear as many would like to think, especially in the company's core market of America," said Russ Mould, investment director at AJ Bell.

"Even so, the kit hire specialist is hiking its dividend for the year to April 2025 to maintain a growth streak in its annual shareholder distribution that now runs for 20 years and keep its status as one of just 17 FTSE 100 index members to have a run of at least 10 straight increases."

Morgan Sindall Group surged 14.58% after it said full-year results would come in "significantly ahead" of expectations, thanks to a strong second-quarter showing from its fit out division.

B&M European Value Retail advanced 3.32% following news that its new chief executive, Tjeerd Jegen, acquired nearly £524,000 worth of company shares shortly after taking on the role.

Ocean Wilsons Holdings rallied 7.46% after announcing a preliminary all-share merger agreement with Hansa Investment Company.

The deal would see Hansa acquire the entire issued share capital of Ocean Wilsons.

On the downside, travel stocks were under pressure as oil prices rose.

British Airways owner International Consolidated Airlines Group lost 3.82%, Wizz Air fell 6.22%, and easyJet dropped 2.72%, reflecting concerns over rising fuel costs.

Bunzl declined 3.09% after RBC Capital Markets downgraded the stock to 'sector perform', weighing on sentiment toward the outsourcing and distribution group.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,834.03 -0.46%
FTSE 250 (MCX) 21,237.05 -0.22%
techMARK (TASX) 5,069.62 -0.57%

FTSE 100 - Risers

Ashtead Group (AHT) 4,564.00p 4.15%
BT Group (BT.A) 188.20p 1.73%
BP (BP.) 389.05p 1.66%
Shell (SHEL) 2,663.00p 1.43%
Unite Group (UTG) 845.00p 1.32%
Fresnillo (FRES) 1,433.00p 1.13%
LondonMetric Property (LMP) 201.00p 0.95%
Diploma (DPLM) 4,738.00p 0.72%
Croda International (CRDA) 3,097.00p 0.68%
Schroders (SDR) 363.60p 0.66%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 313.00p -4.37%
Entain (ENT) 837.60p -3.28%
Bunzl (BNZL) 2,236.00p -2.87%
WPP (WPP) 531.20p -2.75%
easyJet (EZJ) 535.80p -2.72%
Standard Chartered (STAN) 1,156.00p -2.03%
London Stock Exchange Group (LSEG) 10,905.00p -1.85%
Lloyds Banking Group (LLOY) 75.74p -1.84%
Glencore (GLEN) 286.55p -1.75%
Berkeley Group Holdings (The) (BKG) 4,208.00p -1.68%

FTSE 250 - Risers

Morgan Sindall Group (MGNS) 4,400.00p 14.58%
Ocean Wilsons Holdings Ltd. (OCN) 1,580.00p 7.12%
AO World (AO.) 100.80p 5.00%
Renishaw (RSW) 2,845.00p 4.40%
Rank Group (RNK) 131.00p 3.80%
Diversified Energy Company (DEC) 1,097.00p 3.78%
Ithaca Energy (ITH) 170.20p 3.78%
Safestore Holdings (SAFE) 665.00p 3.50%
B&M European Value Retail S.A. (DI) (BME) 264.40p 3.32%
Kier Group (KIE) 185.80p 3.22%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 1,055.00p -7.54%
Auction Technology Group (ATG) 437.50p -3.53%
Ocado Group (OCDO) 244.50p -3.40%
Close Brothers Group (CBG) 366.60p -3.27%
Burberry Group (BRBY) 1,075.00p -3.24%
Baltic Classifieds Group (BCG) 358.00p -3.11%
Pagegroup (PAGE) 267.00p -3.05%
NCC Group (NCC) 163.20p -2.75%
Harworth Group (HWG) 171.00p -2.56%
Keller Group (KLR) 1,490.00p -2.35%

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