The FTSE 100 closed 48.17 points, or 0.5%, lower at 10,636.71 on Tuesday as rising global bond yields weighed on equities and weaker crude prices dragged on London’s major oil producers.
The FTSE 250 rose 0.2% to 24,374.81, while the AIM All-Share gained 0.4% to 786.16.
US Treasury yields pushed further higher, with the 10-year yield at around 5.29% and the 30-year reaching 5.60%, its highest level since 2002. Investors remain concerned that persistent inflation could require further interest-rate increases, with US inflation and employment data later this week likely to shape expectations.
Wall Street was also weaker at the London close, with the Dow down 0.7%, S&P 500 off 0.4% and Nasdaq 0.2% lower.
Oil provided some relief on the inflation front. Brent crude fell to $104.44 a barrel from $107.60 on Monday as investors assessed the possibility of renewed US-Iran negotiations. President Donald Trump has said he expects talks to resume, although the two sides remain divided over the terms for reopening the Strait of Hormuz.
The fall in crude weighed on London’s energy sector, with Ithaca Energy down 3.7%, BP falling 2.3% and Shell losing 1.7%.
British American Tobacco declined 1.9% after warning that current exchange rates could reduce full-year adjusted diluted earnings-per-share growth by between 2% and 2.5% in 2026.
The largest move in the FTSE 250 came from Vesuvius, which surged 25% after confirming it was evaluating a takeover proposal from RHI Magnesita.
The cash-and-share proposal values Vesuvius at 551p per share, or around £1.37 billion, with its largest shareholder Cevian Capital indicating support if the offer is recommended by the board. RHI has until 27 October to make a firm offer or walk away.
Close Brothers jumped 15% after reporting £36 million of annualised cost savings during the 2026 financial year, ahead of its previous target of around £25 million. The merchant bank now expects annualised savings to exceed £60 million by the end of FY2027.
Trustpilot rose 4.3% after Citigroup initiated coverage with a buy rating and 375p target price, while Smiths News gained 4.4% after saying full-year results should exceed market expectations.
Housebuilder Vistry fell 7.8%, giving back some of Monday’s sharp gains following the government’s new support measures for first-time buyers, while AG Barr dropped 3.5% after its half-year results.
In UK politics, Prime Minister Andy Burnham said the state pension triple lock would be modified from 2030, with savings intended to help finance the government’s planned National Care Service. The current guarantee is due to remain in place for the rest of this parliament.
Sterling weakened to around $1.3210, while gold rose to approximately $4,157 an ounce.
For investors, Tuesday’s main pressure remains rising bond yields rather than falling oil. Cheaper crude provides some inflation relief, but a US 30-year yield around 5.6% keeps pressure on equity valuations and financing costs. Attention now turns to US and UK economic data for evidence on whether the latest rise in yields can be sustained.
