UK equities moved higher on Tuesday as investors responded positively to signs of possible diplomatic progress between the United States and Iran, although ongoing disagreements over proposals for a Gaza peace framework continued to cloud the geopolitical backdrop.
The FTSE 100 rose 0.55% by 07:31 GMT. Elsewhere in Europe, Germany’s DAX gained 0.81%, while France’s CAC 40 advanced 0.43%. Sterling was little changed against the U.S. dollar, edging up 0.02% to $1.3436.
Middle East Developments Remain in Focus
Investor sentiment was supported by expectations that diplomatic discussions between Washington and Tehran could ease tensions in the region.
However, uncertainty remained after Israeli Prime Minister Benjamin Netanyahu publicly distanced himself from U.S. President Donald Trump’s proposed framework for Gaza, insisting that Hamas must be fully disarmed before reconstruction efforts can begin.
“There are disagreements with President Trump that I don’t hide regarding the recent agreement with Hamas,” Netanyahu said after meeting former U.N. Middle East envoy Nickolay Mladenov, according to Al Jazeera.
Further confusion emerged after Israeli government spokesman Doron Spielman said the publicly released roadmap “does not reflect Israel’s positions,” despite officials involved in the negotiations stating that Israel had been fully briefed throughout the process.
The Board of Peace also said that any withdrawal by the Israel Defense Forces beyond the “Yellow Line” in southern Lebanon would only take place after all weapons stockpiles and tunnels had been dismantled, in line with commitments made by Hamas to international mediators.
Meanwhile, retired U.S. General Jack Keane told Fox News that Pakistan and Qatar were “compromised” mediators in discussions involving Iran, arguing that both countries favoured Tehran over Washington. He also claimed Saudi Arabia had refused U.S. access to its airbases while urging restraint.
President Trump told reporters at the White House on Monday that the Strait of Hormuz could reopen fully “by tomorrow” if the first phase of discussions with Iran progressed successfully, adding that denuclearisation would form the second phase of negotiations. He also described the suspended military strike as larger than “any attack since World War II.”
Iran’s Foreign Ministry spokesman Esmail Baghaei rejected reports of negotiations, saying a new maritime arrangement with Oman concerning the Strait of Hormuz was solely intended to improve vessel safety.
On Truth Social, Trump reiterated that “nothing gets through to Iran unless we want it to, and nothing will get through unless a Deal, or Total Surrender, is accomplished,” adding that Iran would never be allowed to possess a nuclear weapon.
Commodities
Brent crude rose 1.4% to $84.94 a barrel, while West Texas Intermediate crude gained 0.61% to $80.83. Gold futures climbed 0.73% to $4,120.20 an ounce, with spot gold adding 0.22% to $4,064.
UK Corporate Round-Up
BP (LSE:BP.) reported second-quarter underlying replacement cost profit of $5.73 billion, more than doubling from a year earlier as higher oil and gas prices and stronger refining margins boosted earnings. The company also increased its dividend and continued to reshape its portfolio around its core oil and gas operations.
HSBC (LSE:HSBA) delivered first-half profit ahead of market expectations, supported by higher net interest income and continued growth in wealth management. The bank announced a share buyback of up to $1 billion and maintained its financial guidance.
Metro Bank (LSE:MTRO) posted a 34% increase in underlying first-half pre-tax profit to £60.6 million, driven by growth in commercial, corporate and specialist lending. Management reaffirmed its medium-term outlook, citing a record lending pipeline and expected support from treasury repricing.
SIG (LSE:SHI) reported a 31% decline in first-half underlying operating profit as weak construction demand and higher costs continued to weigh on performance. The company warned that market conditions are likely to remain challenging into 2027.
Travis Perkins (LSE:TPK) increased adjusted first-half operating profit by 6.3%, benefiting from pricing initiatives and cost reductions. Management said its turnaround programme continues to make progress despite subdued construction markets.
Domino’s Pizza Group (LSE:DOM) recorded a 3.6% increase in first-half underlying EBITDA, supported by strong demand during major sporting events and resilient consumer spending on takeaway food.
Smith & Nephew (LSE:SN.) lowered its full-year revenue growth forecast after continued weakness in its U.S. orthopaedics business weighed on second-quarter performance, although it maintained its profit and cash flow guidance.
Segro (LSE:SGRO) agreed to a £14.3 billion takeover by Prologis, creating a logistics property company with a combined market value of around $138 billion following shareholder support for the transaction.
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