UK equities traded higher on Tuesday after official figures confirmed stronger first-quarter economic growth, helping to support investor sentiment despite continued uncertainty surrounding potential negotiations between the United States and Iran.
The FTSE 100 rose 0.16% in early trading, while Germany’s DAX gained 0.80% and France’s CAC 40 advanced 0.33%. Sterling edged 0.05% lower against the US dollar, with GBP/USD trading at 1.3245.
UK economy expands in first quarter
Fresh economic data showed the UK economy grew by 0.6% during the first quarter of 2026, matching both the preliminary estimate published in May and market expectations. The expansion accelerated from the revised 0.1% growth recorded in the previous quarter.
Growth was broad-based across the economy, led by the services sector, which expanded by 0.8%. Annual GDP growth for 2025 was revised down slightly to 1.3% from 1.4%.
Despite stronger headline growth, household finances weakened during the quarter. Real household disposable income per person fell 0.8%, while the household saving ratio declined to 8.9% from 9.6%.
Mixed signals over Iran-US negotiations
Geopolitical uncertainty remained in focus as conflicting statements emerged over potential talks between Washington and Tehran.
US President Donald Trump said discussions with Iran were taking place in Qatar on Tuesday, with envoy Steve Witkoff travelling to Doha. However, Iranian Foreign Ministry spokesperson Esmaeil Baghaei denied that any talks with the United States were scheduled in the coming days, although he confirmed that a technical delegation would visit Doha later in the week.
Baghaei added that negotiations had not yet reached the stage of drafting a final agreement, echoing earlier comments from Iranian negotiator Kazem Gharibabadi, who also denied that technical negotiations had been arranged.
Meanwhile, White House press secretary Karoline Leavitt said Witkoff and Jared Kushner would travel to Doha for high-level discussions, with technical meetings expected alongside the talks.
Differences also emerged over the clearance of mines in the Strait of Hormuz. French President Emmanuel Macron said France and Oman would work with international partners on demining operations, while Iran’s deputy foreign minister insisted Iran would carry out the work independently. Shipping through the strategic waterway remains well below pre-conflict levels.
Iranian President Masoud Pezeshkian said Tehran would honour its commitments if the United States did the same, while warning it would respond firmly to any threats. He also said half of Iran’s US$12 billion in frozen assets held in Qatar would be returned, although US officials have offered differing accounts.
In Lebanon, Parliament Speaker Nabih Berri said the US-brokered agreement with Israel “won’t be implemented,” as clashes between Hezbollah and Israeli forces continued despite the recently announced ceasefire.
Commodities ease
Oil prices moved lower during the session, with Brent crude falling 0.51% to US$73.53 a barrel and West Texas Intermediate declining 0.62% to US$70.31. Gold prices edged higher, with gold futures gaining 0.10% to US$4,043.02 an ounce and spot gold rising 0.31% to US$4,029.22.
UK corporate highlights
Among UK-listed companies, Shell (LSE:SHEL) said global demand for liquefied natural gas could increase by 65% by 2050 to almost 700 million metric tonnes a year, supported by rising energy demand across Asia and the growth of power-hungry data centres.
Meanwhile, J Sainsbury (LSE:SBRY) reported first-quarter like-for-like sales growth of 2.1%, slightly below market expectations and the previous quarter, while maintaining its full-year profit guidance.
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