London stocks ended sharply lower on Tuesday, with the FTSE 100 falling 1.1% as fresh US military strikes on Iran heightened geopolitical uncertainty, while weaker metal prices weighed on mining companies ahead of the American midterm elections.
The FTSE 100 fell 122.90 points to 10,638.43, reversing Monday’s gains. The FTSE 250 declined 0.5% to 24,674.91, while the AIM All-Share slipped 0.4% to 754.60.
European markets also weakened, with France’s CAC 40 falling 0.2% and Germany’s DAX declining 0.5%.
Wall Street was more resilient around London’s close, with the Dow Jones Industrial Average down 0.3%, while the S&P 500 gained 0.5% and the technology-heavy Nasdaq Composite advanced 0.9%.
Geopolitical tensions returned to the forefront after President Donald Trump confirmed that US forces had struck an Iranian anti-aircraft installation on Qeshm Island, near the strategically important Strait of Hormuz.
Trump described the operation as a limited attack, although it followed indications that Washington and Tehran were making progress towards renewed peace negotiations.
Earlier, the US President suggested that an agreement with Iran remained possible, while Iranian officials had signalled a willingness to pursue further diplomatic discussions.
The renewed military activity highlighted the fragility of efforts to end the conflict, which has disrupted international energy supplies and contributed to elevated inflation.
Despite the latest strike, Brent crude fell to $103.24 a barrel, compared with $105.09 on Monday, extending the previous session’s sharp decline.
Trade Nation analyst David Morrison expressed scepticism about the likelihood of a near-term peace agreement, given the continued military activity and unresolved differences between the two sides.
Investors were also closely monitoring the US midterm elections, with voting underway across the country.
All 435 seats in the House of Representatives and 35 Senate seats are being contested, with the outcome determining control of Congress for the remaining two years of Trump’s second presidential term.
Republicans entered the election defending narrow majorities in both chambers, while Democrats were seeking sufficient gains to change the balance of power.
The results could influence expectations for taxation, government spending, energy policy and the administration’s ability to advance its legislative programme.
US economic data provided some encouragement, with job openings rising more strongly than expected in September.
The Bureau of Labor Statistics reported 7.523 million job vacancies, up from a revised 7.190 million in August and ahead of forecasts of approximately 7.13 million.
The figures suggested that labour demand remained relatively resilient despite higher borrowing costs and uncertainty over economic growth.
Investors are now awaiting Friday’s US employment report for October, with economists forecasting approximately 65,000 new jobs, compared with 29,000 in September.
Mining companies were among the biggest drags on London’s FTSE 100 as precious and industrial metal prices weakened.
Gold declined to $3,933.38 an ounce, compared with $3,968.02 on Monday, while silver fell 1.6% and copper dropped 2.5%.
Endeavour Mining plunged 4.7%, Antofagasta fell 3.5%, and both Glencore and Anglo American declined 2.8%.
The retreat in commodity prices added to pressure on a sector already affected by concerns about global economic growth and industrial demand.
Primark owner Associated British Foods also weakened, falling 2.2% after publishing annual results that failed to improve investor sentiment.
Although the figures were broadly consistent with its previous trading update, the company reduced expectations for its Grocery division and warned that its Sugar business was likely to remain loss-making during the new financial year.
Hiscox was among the FTSE 100’s strongest performers, rising 3% to 1,939p, after reporting a near-10% increase in insurance contract written premiums during the first nine months of 2026.
The insurer said third-quarter claims remained within expectations, with relatively limited natural catastrophe losses helping offset shipping-related claims associated with the Middle East conflict.
Other leading blue-chip gainers included Babcock International, 3i Group, WPP and Prudential.
International Workplace Group surged 8.6% on the FTSE 250 after indicating that full-year adjusted earnings would exceed market expectations.
The flexible workspace provider, which operates brands including Regus, said it expected 2026 adjusted EBITDA to exceed the current consensus of $599 million, following another strong quarter.
The update provided support for the company’s shares as demand for flexible and hybrid working arrangements continued to underpin its business.
Drax Group also climbed 6.6% after announcing a proposed partnership with Brookfield Asset Management and Radiant to develop an AI data centre at its North Yorkshire power station.
The project targets more than one gigawatt of data centre capacity, potentially establishing a major artificial intelligence infrastructure development at the existing Drax Power Station site.
Brookfield estimates that total potential investment could exceed £20 billion, including semiconductor equipment, with an initial £2.5 billion associated with the first development phase.
The figures represent prospective investment rather than committed expenditure, with the project’s eventual scale dependent on development, commercial and financing arrangements.
Sterling remained broadly stable at $1.3416 against the US dollar, compared with $1.3417 on Monday, while strengthening slightly against the euro to €1.1986.
US Treasury yields moved higher, with the 10-year yield rising to 4.94% and the 30-year yield reaching 5.30%.
The FTSE 100’s decline reflected renewed geopolitical uncertainty and substantial losses across major mining companies, outweighing positive corporate developments at Hiscox and selected mid-cap businesses.
Attention will now turn to Wednesday’s UK services PMI figures, eurozone inflation data and US employment indicators, alongside half-year results from Marks & Spencer and a trading update from Barratt Redrow.
The outcome of the US midterm elections and Thursday’s Bank of England interest rate decision will also remain central to market sentiment, as investors assess the outlook for economic growth, inflation and global financial markets.
