FTSE 100 pressured by Middle East tensions

LONDON - British equities opened lower on Tuesday with the ongoing hostilities between Iran and Israel weighing on market sentiment, and causing an investor shift to safe-haven assets.

The blue-chip FTSE 100 index was down 0.4% by 0900 GMT after closing very near to record highs on Monday. The domestically focused midcap index was nearly flat.

As the Israel-Iran conflict entered its fifth day, US President Donald Trump departed early from the Group of Seven summit in Canada where he signed a trade deal with British Prime Minister Keir Starmer.

The agreement eliminated aerospace tariffs and reaffirmed quotas and tariff rates on British automobiles, while steel and aluminium imports remained unresolved.

The Oil, Gas and Coal index gained 1.5% with oil prices ticking higher due to tensions in the Middle East. BP and Shell added over 1% each as the top gainers on the blue-chip.

Declines were led by the Travel and Leisure index with Wizz Air slipping 2.5% after sources said the airline was nearing a deal with Pratt & Whitney to purchase engines for 177 of its Airbus jets.

The spotlight this week will be on central bank meetings, with both Bank of England and the US Federal Reserve expected to keep rates steady.

Investors will closely monitor hints regarding further easing of rates after the BoE cut rates by a quarter point in its May meeting.

Also being closely monitored are announcements on trade deals as Trump's early July deadline on tariffs comes closer.

In individual stocks, construction company Morgan Sindall hit a record high, rising 17.6%, after forecasting a higher fiscal-year 2025 profit.