The FTSE 100 moved higher on Tuesday as investors assessed a slowdown in UK shop price inflation alongside developments involving the US and Iran.
The FTSE 100 was up 0.33% as of 03:16 ET (07:16 GMT). Elsewhere in Europe, Germany’s DAX declined 0.20% and France’s CAC 40 fell 0.10%.
Sterling was down 0.15% against the US dollar at $1.3238.
UK Shop Price Inflation Eases to 1.4%
British Retail Consortium data showed shop price inflation slowed to 1.4% year on year in September from 1.5% in August. The reading was below the 1.5% forecast but remained above the three-month average of 1.3%.
Food inflation eased to 2.5% from 2.8%, while non-food inflation declined to 0.8% from 0.9%.
The British Retail Consortium said retailers were absorbing higher costs associated with business rates, employment, energy and packaging taxes, while indicating there were limits to their ability to continue doing so.
Broader UK consumer price inflation stood at 3.1% in August and is expected to exceed 4% in early 2027 as higher energy prices related to the Iran conflict feed through to inflation.
Investors Monitor US-Iran Discussions
Iran expects to receive an official US response on Tuesday to its proposal concerning the reopening of the Strait of Hormuz, Foreign Minister Abbas Araghchi said, according to Mehr news agency.
“There are conditions that have been emphasised by the (supreme) leader, and these conditions must be implemented for the Strait of Hormuz to open,” Araghchi said.
He said Qatari mediators were expected to present proposals to Washington, with Iran hoping for a response “by tomorrow”.
US President Donald Trump confirmed that US officials had separately spoken with mediators on Monday, saying the process would “go pretty quickly”.
A US official described the discussions as “positive and constructive” but said an agreement would require nuclear issues to be addressed.
Trump also denied reports that he had offered sanctions relief or access to frozen funds. “This is untrue. I offered them nothing,” he wrote on Truth Social.
US Secretary of State Marco Rubio said the Strait of Hormuz was open and that oil flows, excluding Iranian crude, were close to levels recorded before the conflict.
Iran presented a seven-day proposal at the UN General Assembly last week that included ending hostilities, unfreezing assets, removing oil sanctions and lifting the US port blockade in exchange for reopening Hormuz. Trump rejected the proposal on Friday.
Treasury Yields and Oil Prices Remain in Focus
Jefferies economist Mohit Kumar said financial markets remained sensitive to interest rates and oil prices.
“We are in a one factor world where rates are likely to drive all asset classes and rates are being driven by oil prices,” Kumar wrote in a note.
He noted that the 10-year US Treasury yield had moved above 5.25%, while the S&P 500 declined 0.8% on Monday.
Jefferies continues to see the possibility of an agreement before the US midterm elections but said it remains in “reduced risk mode” pending greater clarity on geopolitical developments.
UK Police Investigate Possible Foreign State Involvement
In the UK, five men arrested on Sunday near RAF Fairford on suspicion of terrorism and explosives offences were released on bail, police said.
Counter-terrorism officers are examining whether a foreign state was involved. Iran has denied involvement.
Rubio described the matter as “a very serious situation” involving a “foreign actor”.
Oil and Gold Prices Rise
Brent crude futures increased 1.34% to $99.15 a barrel, while WTI crude rose 1.24% to $93.75.
Gold futures were higher at $4,175.40, while spot gold gained 0.72% to $4,144.87.
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