The FTSE 100 closed lower on Monday as rising oil prices, driven by Middle East tensions, weighed on investor sentiment. The index fell 38.59 points, or 0.4%, to 10,862.50.
The FTSE 250 also declined, ending down 110.32 points, 0.4%, at 24,744.54, while the AIM All-Share edged up 0.49 points, 0.1%, to 796.38.
Oil prices climb on Iran warnings
Crude oil extended recent gains after Iran's Revolutionary Guard Corps warned on Sunday that it would not reopen the Strait of Hormuz until Washington met demands including compensation for war damage. Brent oil for October delivery traded at 86.35 US dollars a barrel, up from 83.40 dollars late Friday.
US President Donald Trump downplayed the prospect of the Strait reopening, telling Axios in a phone call: "We are low-keying it." He added: "We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money." Trump said the US naval blockade of Iranian ports has worsened the situation, but concluded: "It will work out. It always works out. It's like a chess game."
AJ Bell investment director Russ Mould said the Iran conflict remains a "key source of concern for markets", with a lasting resolution seeming a distant prospect.
US inflation data in focus
Investors are looking ahead to Wednesday's US inflation figures after last week's surprisingly soft jobs data, which suggested the Federal Reserve might hold off on raising borrowing costs. The Federal Open Market Committee will receive another CPI reading and a jobs report before its September meeting, and the Jackson Hole Symposium is also upcoming.
The pound traded at 1.3522 dollars, up from 1.3498 dollars at Friday's equities close. Against the euro, sterling rose to 1.1708 from 1.1677. The euro stood lower at 1.1549 dollars versus 1.1560, while the dollar strengthened to 158.92 yen from 157.68.
The yield on the US 10-year Treasury stretched to 4.70% from 4.65%, and the 30-year yield widened to 5.24% from 5.20%.
European and US markets mixed
In Europe, the CAC 40 in Paris closed up 0.1% and the DAX 40 in Frankfurt ended slightly higher. In New York, the Dow Jones Industrial Average was slightly up, the S&P 500 slightly down, and the Nasdaq Composite fell 0.3%.
JPMorgan raised its 2026 S&P 500 price target to 8,000 from 7,800, noting that although free cash flow is expected to remain negative in financial 2027 for most hyperscalers, demand and order coverage are improving relative to capex. The broker said: "This suggests that monetisation may start ramping faster than spending, which should support stronger future revenue growth and further alleviate concerns about return on invested capital."
London market movers
Oil gains lifted BP and Shell by 1.4% and 0.6% respectively. Tobacco stocks fell sharply, with British American Tobacco down 4.4% and Imperial Brands down 4.6%. Legal & General dropped 1.6% after Citigroup downgraded it to "sell" from "neutral", noting shares are up 19% year-to-date and valuation looks "demanding".
Housebuilders were pressured by higher bond yields: Persimmon fell 2.0%, Barratt Redrow 2.5%, and Vistry declined 12% on the FTSE 250. The Financial Times reported that credit insurer Allianz Trade plans to reduce cover to Vistry suppliers by up to 70%, worsening a cash flow squeeze.
Plus500 rose 2.1% after reporting a 12% rise in group revenue to an all-time high. Pretax profit increased 0.8% to 183.2 million dollars in the six months to June 30, from 181.8 million a year earlier. Revenue jumped to 462.9 million dollars from 415.1 million.
Gold traded at 4,350.91 dollars an ounce, up from 4,349.35 dollars. David Morrison, analyst at Trade Nation, said: "Gold has had a decent run since the beginning of this month helped along by dollar weakness... Given the size of the rally in gold last week, it may have to pull back and consolidate in order to build enough upside momentum for another push higher."
Top FTSE 100 risers: Fresnillo up 99.0p, Glencore up 11.7p, Spirax Group up 150.0p, Metlen Energy & Metals up 0.7p, and BP up 7.4p. Top fallers: Coca-Cola HBC down 236.0p, Imperial Brands down 127.0p, British American Tobacco down 193.0p, Vodafone down 3.7p, and Barratt Redrow down 8.2p.
Tuesday's global calendar includes an Australian interest rate decision and Japanese trade data. UK corporate results due include half-year figures from InterContinental Hotels Group and a trading update from Bellway.
