British equities traded slightly higher on Monday after weekend ceasefire discussions between the United States and Iran failed to produce a breakthrough, with gains in energy shares helping offset broader geopolitical concerns. Investor sentiment remained cautious after U.S. President Donald Trump rejected Tehran’s latest peace proposal as “totally unacceptable.”
By 07:30 GMT, London’s benchmark FTSE 100 index was up 0.20%, while France’s CAC 40 declined 0.64% and Germany’s DAX slipped 0.04%.
Sterling weakened against the dollar, with GBP/USD falling 0.24% to 1.3601 as investors moved toward safe-haven assets. Brent crude oil climbed above $104 per barrel overnight amid renewed fears surrounding Middle East supply disruptions.
Iran’s latest response, reportedly delivered through Pakistani intermediaries, called for war reparations, recognition of Iranian sovereignty over the Strait of Hormuz, and full sanctions relief within 30 days. Iranian state media quoted an official as saying no one in Tehran drafts proposals designed to satisfy Trump, adding that his dissatisfaction was viewed positively by Iran.
The Strait of Hormuz remains at the centre of the dispute. Iranian lawmakers and state media maintained that the strategic shipping route would not return to its previous operating conditions following the conflict, a stance firmly opposed by Washington.
U.S. Energy Secretary Chris Wright reiterated on Sunday that unrestricted passage through the Strait of Hormuz remained non-negotiable for the United States. Trump also suggested the possibility of additional military action, stating that the U.S. had completed around 70% of its intended targets and “could go in for two more weeks.”
On the domestic front, Prime Minister Keir Starmer is expected to deliver a major speech later today outlining closer ties with the European Union as a central objective of his government. Markets will be watching for any signals regarding trade normalisation, which could provide support for UK mid-cap stocks during the session.
UK Round-Up
Palantir (NASDAQ:PLTR) and other contractors have reportedly been granted extensive access to identifiable patient data through administrative privileges on NHS England’s primary data platform, according to the Financial Times. Internal briefing documents acknowledged “considerable public interest and concern” regarding Palantir’s involvement with NHS systems and recommended imposing limits and expiry periods on external access, although the permissions had already been approved.
Compass Group (LSE:CPG) upgraded its forecast for full-year underlying operating profit growth to above 11%, compared with previous guidance of around 10%, after strong new contract wins drove robust first-half trading. The catering giant said continued demand for workplace dining services is expected to outweigh any impact from companies reducing office space as artificial intelligence reshapes white-collar employment patterns.
Heathrow Airport reported a 5% decline in passenger traffic during April to 6.7 million travellers, as conflict involving Iran significantly reduced Middle East traffic by more than 50%. However, transfer passenger volumes increased 10% as more travellers rerouted through London. Chief executive Thomas Woldbye described the disruption as “short-term” ahead of an updated 2026 passenger forecast due in June.
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