The FTSE 100 closed 0.16% lower at 10,441.60 on Thursday, while the FTSE 250 fell 0.39% to 23,943.88.
Brent crude surged more than 4% to above $104 a barrel, driven by rising risks to Middle East supply and hurricane-related production shutdowns in the US Gulf of Mexico.
Geopolitical concerns also intensified after reports that US President Donald Trump is considering whether to escalate military action against Iran before or after November’s midterm elections. The White House has not announced a decision to launch further strikes.
The combination of higher oil and already-elevated bond yields continued to raise concerns that inflation could remain persistent and interest rates higher for longer.
UK housing data added to the cautious tone. The RICS house-price balance fell to -32 in September from -28 in August, ending four months of improvement as renewed expectations for higher borrowing costs weighed on buyers.
Separately, the UK and Germany launched their first Industrial Tech Corridor, designed to connect AI and critical-technology companies with major industrial partners in both countries. The initiative will initially focus on AI and high-value industrial applications.
Among individual stocks, Tesco jumped 5.4% after a stronger first half and an upgrade to full-year guidance.
Britain’s largest supermarket now expects adjusted operating profit of £3.15 billion to £3.3 billion, compared with its previous £3.0 billion-£3.3 billion range. It also increased its share buyback programme by £200 million to £950 million.
Imperial Brands rose 4.7% after maintaining its annual outlook and launching a new £1.5 billion share buyback. The tobacco group continues to expect adjusted operating profit growth of 3%-5%.
Aberdeen Group gained 1.4% after raising £436 million from the sale of 52 million Standard Life shares, cutting its holding roughly in half to around 5.2%.
Standard Life fell 4.3%, making it one of the weakest performers in the index.
For investors, the market remains caught between strong individual company earnings and a deteriorating macro backdrop.
As long as oil remains above $100 and bond yields stay elevated, inflation and interest-rate concerns are likely to remain the dominant influence on UK equities.
