UK equities moved lower on Thursday as weakness among mining companies, rising government bond yields and renewed concerns over oil shipments through the Strait of Hormuz weighed on market sentiment.
The FTSE 100 declined 0.60% by 08:21 BST, while European markets also traded lower. Germany’s DAX fell 0.82%, and France’s CAC 40 lost 0.90%. Sterling weakened 0.15% against the US dollar to $1.3203.
Mining stocks were among the largest contributors to the decline in London, reflecting weakness across several industrial metals and continued pressure from higher borrowing costs.
Antofagasta (LSE:ANTO) fell 2.1%, while Anglo American (LSE:AAL), Rio Tinto (LSE:RIO) and Fresnillo (LSE:FRES) recorded losses ranging from 1.4% to 1.8%.
In commodities trading, silver declined 1.5%, aluminium on the London Metal Exchange fell 0.6%, and nickel slipped 0.63%. Copper prices were broadly unchanged.
Oil prices, meanwhile, advanced sharply amid concerns about shipping activity and potential supply disruptions in the Strait of Hormuz.
Brent crude futures rose 3.7% to $103.89 a barrel, while US West Texas Intermediate gained 3.2% to $91.25.
Gold prices also increased, with futures advancing 0.22% to $4,159 an ounce and spot gold rising 0.37% to $4,126.52.
Shipping data indicated a reduction in vessel movements through the Strait of Hormuz. According to Kpler, transits declined to a two-month low, with seven vessels recorded on Tuesday and 10 on Wednesday, compared with more than 20 on each of Sunday and Monday.
Crude oil flows through the waterway were estimated at a minimum of 10.1 million barrels per day, equivalent to approximately 74% of levels recorded before the conflict.
The UK Maritime Trade Operations organisation reported that a tanker had been struck by projectiles off the coast of Qatar on Wednesday, adding to concerns about maritime security in the region.
Statements from Iranian and US officials presented differing assessments of the situation.
Iranian Foreign Minister Abbas Araghchi claimed on social media platform X that US aircraft losses were substantially higher than publicly reported, alleging that 81 aircraft had been downed, compared with 42 cited by the Congressional Research Service in May. He did not provide evidence to substantiate the claim.
Separately, Ali Mohammadi, deputy political commander of Iran’s Islamic Revolutionary Guard Corps Navy, challenged US statements about conditions in the waterway.
A White House official told Al Jazeera that the Strait of Hormuz remained open and that substantial volumes of crude oil were being escorted through the passage daily. Those statements differed from the shipping activity figures reported by Kpler.
US President Donald Trump also commented on the possibility of an agreement with Iran during a campaign rally in San Antonio, Texas, indicating limited interest in pursuing a deal under the circumstances described.
NBC reported that indirect discussions had taken place in New York, with Washington rejecting an Iranian proposal linking the reopening of the strait to sanctions relief.
Separately, The Atlantic reported that Trump had requested military strike options ahead of the US midterm elections scheduled for 3 November.
Government bond markets remained another source of pressure on equities.
The yield on the benchmark US 10-year Treasury note rose to 5.329%, approaching its 52-week high of 5.366%.
In the UK, the 30-year gilt yield increased to 6.018%, close to its recent peak of 6.036%.
Higher bond yields can increase financing costs for businesses and influence equity valuations, particularly when investors reassess the outlook for interest rates and economic growth.
ING analyst Michiel Tukker linked increased volatility in European interest rate markets to movements in US Treasury yields, particularly after the benchmark yield moved above 5%.
He indicated that elevated volatility could persist over the coming months.
UK Corporate News: Tesco, Imperial Brands and Unite Group
Tesco (LSE:TSCO) raised the lower end of its full-year profit guidance following an increase in first-half operating profit. The supermarket group reported operating profit growth of 6.5% and increased its share buyback target to £950 million.
Imperial Brands (LSE:IMB) reaffirmed its financial outlook for the year and announced a further £1.5 billion share repurchase programme. The tobacco company said growth in next-generation products helped offset weaker conventional cigarette sales.
Unite Group (LSE:UTG) reported a 4% quarterly decline in the valuation of its principal student accommodation fund. The company also reiterated plans to dispose of between £300 million and £400 million of assets during the year.
The combination of falling mining shares, rising oil prices and elevated government bond yields contributed to the weaker performance of UK equities, while investors continued to monitor developments in the Middle East and their implications for energy supplies and financial markets.
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