London stocks ended lower on Tuesday, although the FTSE 100 recovered from heavier earlier losses as oil prices retreated amid reports of fresh US-Iran peace proposals, while stronger UK employment figures supported sterling.
The FTSE 100 fell 31.69 points, or 0.3%, to close at 10,733.00, having traded as low as 10,673.02 earlier in the session.
The FTSE 250 declined 0.1% to 24,364.76, while the AIM All-Share dropped 0.7% to 762.93.
Brent crude fell to $106.65 a barrel by the London close, having reached $111.20 earlier in the day, following an unconfirmed report that Qatar and Pakistan had proposed a framework for renewed negotiations between the United States and Iran.
The reported proposal was said to address demands from both countries, although no formal agreement had been independently confirmed.
The retreat in energy prices helped European equities recover some ground, with France’s CAC 40 closing 0.4% lower and Germany’s DAX slipping 0.1%.
Political unrest in France continued to weigh on European investor confidence, with Prime Minister Sébastien Lecornu promising a substantial security deployment ahead of further demonstrations planned for the weekend.
Investors remain concerned about the potential impact of social unrest on French public finances and government borrowing costs, particularly as the country faces pressure to implement fiscal reforms.
On Wall Street, markets recovered, with the Dow Jones Industrial Average rising 1%, the S&P 500 gaining 0.4% and the Nasdaq Composite advancing 0.2% around London’s closing bell.
Attention is now shifting towards quarterly earnings from major US technology companies, with investors seeking evidence that substantial investment in artificial intelligence infrastructure can generate sustainable returns.
Netflix and SpaceX are scheduled to report results after Tuesday’s US market close, followed by Meta Platforms and Tesla on Wednesday.
Technology shares have experienced significant volatility in recent sessions as investors reassess AI-related spending, valuations and future profitability.
In the UK, fresh labour market figures provided some encouragement, with the unemployment rate unexpectedly falling to 4.7% in the three months to August, compared with 4.9% in the previous reporting period.
The Office for National Statistics also estimated that payroll employment increased by 13,000 in September, following a decline of 26,000 in August.
However, the number of payrolled employees remained 66,000 lower than a year earlier, indicating that employment conditions have yet to recover fully.
Average total earnings growth slowed to 3.7% from 3.9%, coming in below market expectations of 3.8%.
Deutsche Bank economist Sanjay Raja said the figures suggested that stronger economic growth was beginning to support the labour market, with employers cautiously returning to recruitment.
The latest data strengthened expectations of a Bank of England interest rate increase at its November meeting, although analysts remain divided over the likelihood of further tightening in December.
Sterling strengthened to $1.3376 against the dollar, compared with $1.3316 on Monday, while also advancing to €1.1901 against the euro.
Among individual FTSE 100 stocks, Experian gained 2.7% after US credit reporting competitor Equifax surged following stronger-than-expected quarterly results.
Anglo American edged 0.4% higher after maintaining its 2026 production guidance and confirming progress towards its proposed merger with Teck Resources.
Chief Executive Duncan Wanblad said approval from China’s competition regulator remains the final outstanding regulatory requirement, with completion still targeted by March 2027.
Bunzl fell 2.9% after its third-quarter trading update failed to deliver the earnings guidance upgrade some investors had anticipated.
On the FTSE 250, Genuit plunged 12% after lowering its annual profit expectations, citing unusually warm weather that reduced demand for heating-related products.
In contrast, Ocado surged 10% after JPMorgan raised its share price target to 460p from 290p, citing improving prospects for its relationship with Marks & Spencer and potential opportunities to unlock value from its logistics operations.
Barratt Redrow, Howden Joinery, SSE and National Grid were among the FTSE 100’s strongest performers, while Diploma, IG Group, Halma and Rio Tinto featured among the largest fallers.
Gold eased to $4,131.02 an ounce, while US Treasury yields declined slightly, with the benchmark 10-year yield falling to 5.11%.
The FTSE 100’s recovery from its session lows reflects the impact of easing oil prices and stronger UK employment figures, although concerns over geopolitical developments, European political instability and technology valuations continue to influence markets.
Attention now turns to Wednesday’s UK inflation and public borrowing figures, alongside trading updates from Fresnillo, Aberdeen and Segro, which could provide further direction for interest rate expectations and London equities.
