London stocks moved lower at midday on Tuesday, with the FTSE 100 falling 0.7% as renewed tensions between the United States and Iran pushed oil prices higher, while weakness across mining, defence and consumer stocks weighed on investor sentiment.
At midday, the FTSE 100 was down 0.68% at 10,687.72, reversing Monday’s gains, while the FTSE 250 declined 0.47% to 24,680.55.
Oil prices rose more than 1.5% after Monday’s more than 7% drop, as hopes of a diplomatic breakthrough between Washington and Tehran faded.
An Iranian official indicated that an agreement to end the conflict remained some distance away, while reports of fresh US military strikes on Iran’s Qeshm Island near the Strait of Hormuz added to market uncertainty.
The developments followed earlier indications that Tehran was prepared to resume peace negotiations, with US President Donald Trump also signalling a willingness to allow further diplomatic efforts following the American midterm elections.
The renewed increase in crude prices revived concerns about inflation and the outlook for interest rates, particularly as disruption to Middle Eastern energy supplies continues to affect global markets.
Investors are preparing for Thursday’s Bank of England monetary policy decision, with economists widely expecting a 25-basis-point increase in interest rates.
Higher energy costs have contributed to persistent inflationary pressures, prompting central banks to reassess the need for further monetary tightening.
Aerospace and defence stocks were among the FTSE 100’s weakest sectors, falling approximately 1.2%.
Rolls-Royce declined more than 1.6%, while information and analytics group Relx also fell by a similar amount, adding pressure to London’s blue-chip index.
Industrial metal miners dropped 2.1% to their lowest level in almost four months, tracking weaker copper prices, which fell to seven-week lows.
Anglo American declined 2.8% and Antofagasta lost 2%, reflecting growing caution towards the outlook for industrial metals demand.
Precious metal miners also struggled, with the sector falling approximately 2.7% to a three-month low as gold prices declined around 1%.
The weakness across mining companies added to the FTSE 100’s losses, offsetting support from selected defensive and utility stocks.
Among individual companies, Drax Group surged 9%, making it one of the strongest performers in the FTSE 250.
The power generator announced a partnership with Brookfield Asset Management and Radiant to develop a data centre, providing a potential opportunity to expand its involvement in energy infrastructure serving the growing digital economy.
Coca-Cola Europacific Partners fell 2.4% after warning of cost pressures, highlighting the impact of inflation on consumer goods businesses.
Primark owner Associated British Foods declined 3%, making it one of the FTSE 100’s weakest performers after forecasting lower annual profits.
The outlook disappointed investors as the group continues navigating challenging trading conditions and cost pressures across its operations.
In contrast, Hiscox advanced 3% after reporting a 9.5% increase in insurance premiums during the first nine months of 2026.
The insurance group’s performance provided some support for financial stocks amid the wider market decline.
Investor attention is also focused on Tuesday’s US midterm elections, which will determine control of Congress and could influence the direction of American fiscal, energy and regulatory policy.
The outcome may also shape market expectations for US government spending and the administration’s ability to advance its legislative priorities.
The FTSE 100’s midday decline reflects renewed geopolitical uncertainty and pressure on mining companies, with higher oil prices raising fresh concerns about inflation just days before the Bank of England’s interest rate announcement.
Attention will now turn to developments in US-Iran relations, the outcome of the American midterm elections and Thursday’s Bank of England decision, as investors assess whether the latest market weakness will extend into the remainder of the week.
