- FTSE 100 down 110 points at 10,498
- Markets await confirmation of US-Iran talks
- UK bond eyes developments in Westminster
- AB Foods, British Land, THG, Jupiter, Crest Nicholson updates in focus
5.09pm: Stocks under pressure
The FTSE 100 finished the day 110 points lower at 10,498 despite reports of a second round of US-Iran negotiations.
“European markets weakened amid deteriorating economic sentiment and heightened exposure to energy risks,” IG chief technical analyst Axel Rudolph said.
“Oil markets remained volatile, but ended the day little changed as Iran signalled willingness to resume negotiations with the US, though tensions remain elevated.”
4.12pm: FTSE down over 100 points in the red
The FTSE 100 has now fallen over 110 points, with US stocks dropping into the red too, and oil prices climbing.
US President Donald Trump has said he is expecting Iran to turn up to peace talks in Islamabad.
But Pakistan says Iran has yet to confirm whether a delegation will attend.
A senior minister in Pakistan said the country, as mediator, remained "in constant touch with Iranians and pursuing the path of diplomacy and dialogue".
The ceasefire ends tomorrow evening US time.
"Pakistan has made sincere efforts to convince the Iranian leadership to participate in the second round of talks and these efforts continue," the minister said.
On the Footsie, the biggest fallers are Rolls-Royce (down 6.2%), BAE Systems (-4.3%) and Endeavour Mining (-3.8%).
Other fallers include aerospace supplier Melrose, medical trio GSK, Smith & Nephew and AstraZeneca, precious metals miner Frensillo, tobacco giants BAT and Imperial, plus utilities and airlines.
3.37pm: Is oil market too optimistic?
Oil prices have climbed a little in the past couple of hours. Brent crude is up 0.9% at $96.40 a barrel.
Oil markets may be underestimating the risk of further disruption from fighting in the Middle East, according to analyst James Hosie at Shore Capital, who warns prices could remain elevated even without escalation.
He says the current ceasefire between the US and Iran has led to “ambiguity leading to complacency”, with markets assuming supply disruptions will be short-lived.
However, Hosie notes that conditions in the Strait of Hormuz have “not materially improved”, with only a limited resumption of shipping activity and warned markets may be “persistently too optimistic”, pointing to pricing that suggests traders expect a near-term resolution despite ongoing blockades.
The analyst adds that Iran has shown its ability to control movement through the Strait, meaning disruption to global oil flows could last longer than currently priced in.
2.55pm: Wall Street opens higher
Wall Street has started on the front foot, boosted by some solid earnings reports.
The Dow Jones has opened 0.7% higher, led by UnitedHealth, up over 9% on the back of its earnings earlier.
The S&P 500, where the same company is also at the top of the leaderboard, and Nasdaq have both inches up 0.3%.
Other top risers on the S&P include a broad range of companies, including rival health insurer Humana and homebuilder DR Horton.
Halliburton and 3M are up strongly on the back of earnings too, up 4.5% and 2.6%.
1.47pm: India giving itself a bad name, says AIM company
The biggest faller in London today is Mercantile Ports & Logistics Ltd, which has plunged 69.5% after the group said it will step up legal action to regain control of its Karanja terminal asset, on the eastern side of Mumbai harbour.
The company notes that the Committee of Creditors (CoC), India's formal insolvency process, has unanimously rejected the company’s proposals to repay debts in full despite its assertion that it was “ready, willing and able" to redeem the debt in full.
MPL described the process as “biased and inaccurate” and claimed events had been “stage-managed for many months”.
The CoC has instead sided with Adani Ports & SEZ, a vehicle owned by the billionaire Adani family.
MPL managing director Pavan Bakhshi says the outcome was “nothing short of brazen”, adding the group faced a “coordinated and malicious attempt” to strip it of the asset.
The board said it was “shocked” that creditors approved a rival Adani plan while the matter was still before the court.
MPL said it will “continue to pursue every legal avenue available” and chairman Jeremy Warner Allen says the company will raise concerns with the UK, US and Indian governments "on how investors from their respective countries are being cheated".
He says the situation should be addressed "so that it does not undermine the credibility" of the recent UK-India trade deal, which otherwise might "signal that a strategically developed, internationally funded asset can become a casualty, even as both nations publicly champion stronger bilateral investment ties".
1.13pm: US stocks set to open higher, United Health to lift Dow
US stock futures are pointing to a firmer open, while investors have some more earnings and a grilling for new Fed chief Kevin Warsh later to distract them from waiting for any news on Iran.
Dow Jones futures are up 0.6%, while S&P 500 and Nasdaq futures have gained 0.4% and 0.5%, respectively.
Market analyst Fawad Razaqzada at FOREX.com notes that oil markets are "holding steady, ready to potentially resume higher on any signs of a major re-escalation".
Corporate earnings in focus include GE Aerospace, Danaher Corporation, 3M Company, Northrop Grumman and UnitedHealth.
The latter reported lower earnings than last year, but better than expected, with the shares up almost 8% in pre-market trading, which will support the Dow.
Later, investors will watch the confirmation hearing of Federal Reserve chair-designate Kevin Warsh, with markets alert to signals on interest rates and central bank independence.
12.29pm: FTSE flat, other markets more positive
By lunchtime on Tuesday, the FTSE 100 has remained flat, while its mid-cap sibling is soaring.
Rolls-Royce and BAE Systems, down 2.9% and 2.2%, have joined AB Foods among the biggest fallers.
Other aerospace and defensive names are weighing too, including GSK, AstraZeneca, BAT, Melrose and Imperial Brands.
The FTSE 250 index is up over 229 points or 1% at above 23,169 as Funding Circle, Ocado, THG and solar and renewables trusts are leading the way.
European stock indices were modestly firmer across the board too, with benchmarks in Frankfurt and Madrid up 0.5-0.6%, while Paris is flatter.
"Investors continue to monitor developments around potential peace talks, particularly after President Trump again warned Iran that overwhelming military force would be used if no agreement is reached before the ceasefire expires tomorrow evening," says market analyst David Morrison at Trade Nation.
11.36am: Crest Nicholson profit warning
Crest Nicholson shares have dropped 39% after the housebuilder warned on profits due to a collapse in land sale expectations driven by deteriorating buyer confidence.
The company cited increased macroeconomic uncertainty, with the war in the Middle East contributing to the prospect of interest rates remaining higher for longer, as well as renewed cost pressures and a deterioration in consumer confidence.
Trading was said to remain positive in the Midlands, South-West and Eastern divisions, but "continued softness" was seen in the South division.
Recent weeks has seen a "marked softening in sentiment among prospective land purchasers" due to the uncertain outlook, resulting in "reduced engagement in bidding processes and an increased reluctance to transact at market values".
11.05am: UK energy policy effects
Ed Miliband's plans to decouple electricity costs from gas will not be easy or quick to do, says Richard Neudegg, director of regulation at Uswitch.com.
"Household electricity bills can be held hostage by market gas prices because of how the wholesale market works, which can cause real pain in periods of market shock, which we have seen during global conflicts like Ukraine and now Iran."
With the government aiming to weaken and eventually break the link between the cost of gas and the price we pay for electricity, today's move of older renewable energy generation onto fixed-price contracts "will make a difference", but these the compannies that generate this power "will have to be encouraged to make this shift voluntarily".
He says: "Amending the taxes on electricity generators' profits in situations where the gas price is high might convince some generators to agree new pricing arrangements, or at least give the government more funding to help out vulnerable households."
As well as SSE, Centrica and Drax shares are up this morning, along with Bluefield Solar Income Fund, The Renewables Infrastructure Group and Foresight Environmental Infrastructure.
Foresight Solar Fund moved to reassure investors that the removal of the Carbon Price Support (CPS) mechanism from April 2028 will have only a modest effect on its net asset value.
10.13am: UK bond market eyes Starmer pressure
UK government borrowing costs have spiked this morning, with some analysts attributing this to the pressure on Sir Kier Starmer related to the appointment of Peter Mandelson as US ambassador.
What's undeniable is that the 10-year gilt yield has jumped above 5%, a key red flag for markets. Now 5.094%, the 10-year yield is up from 4.78% yesterday.
Today will see former top civil servant Sir Olly Robbins answering questions from a parliamentary committee about Mandelson's appointment.
There will be questions over what the Prime Minister knew about Mandelson’s past associations, including links to Jeffrey Epstein, alongside concerns about the handling of sensitive government information and reported connections to foreign business interests in jurisdictions such as China and Russia.
"Bond markets don’t react to headlines alone, they react to what those headlines imply about the UK government’s control, discipline and credibility,” says Nigel Green of DeVere Group.
“Today’s developments go directly to those fundamentals.”
Green highlights how yields surged following Liz Truss's infamous mini-Budget in 2022, which he calls "the benchmark for political risk in UK markets".
"Investors have seen how quickly things can unravel once credibility is in doubt. This experience has permanently changed how gilts are priced."
Despite pressure on the PM, a leadership challenge before the May elections "remains unlikely at this stage,” says Green.
"But the ground is clearly unstable. Markets are alert to the possibility that a misstep today could mark the start of a deeper unravelling."
He says investors view Starmer and Chancellor Rachel Reeves as "a single economic framework", which if it seen as a weakening "would trigger a reassessment across bond markets", with markets having a history of moving ahead of political confirmation.
"Investors don’t wait for official announcements,” he says. “They respond to signals. Signs of fragmentation, briefing wars, or slipping authority can drive yields higher within hours."
9.23am: BP project in Gulf of Mexico in legal deep-water?
BP is reportedly facing a legal challenge in the US over its $5 billion Kaskida deepwater project in the Gulf of Mexico.
Environmental groups have sued to overturn approval granted by the Trump administration, according to the Guardian, arguing the ultra-deep drilling poses major risks.
The project, located 250 miles offshore Louisiana, will drill in waters 6,000ft deep, with wells extending miles below the seabed.
Campaigners say BP has not demonstrated it can safely operate at such depths, citing concerns linked to the Deepwater Horizon oil spill.
BP rejects the claims and says the project will be safe.
8.49am: Primark split analysed
AB Foods splitting in two was "as we expected", says analyst Clive Black at Shore Capital, though it surprised the market when first mooted in November.
"Whilst there is water to flow under the [bridge], the separation is due to be complete before the end of 2027, we foresee valuation creation potential in due course," he says.
In the near term, for the current year, ABF is stating through its H1 update that EPS will be a little lower than previously expected due to still weak sugar markets.
"We expect to lower our EPS forecast to circa 156p," says Black.
"There is a lot to like in the prevailing and emerging ABF investment theses, with the combined group equity trading on undemanding multiples and the confirmed demerger, FY26 guidance and favourable valuation metrics leading us to retain our Hold stance on the group's equity."
Aarin Chiekrie, analyst at Hargreaves Lansdown, says the demerger "comes at a tricky time".
"While UK sales have held up relatively well, European consumers have been particularly cautious about updating their wardrobe, causing Primark’s first-half sales to rise only 2% higher to £4.7bn, with growth largely being driven by new store openings.
"Still, the Primark spin-off makes sense given just how different the business is from the rest of its grocery, ingredients, sugar, and agriculture divisions. We view it as a good way to sharpen management’s focus and potentially unlock value in the respective businesses."
He sees ABF as "managing the direct impacts of the Middle East crisis well", with hedging arrangements mean that higher energy and freight costs in 2026 should be manageable.
8.15am: FTSE just above flat
It's a flat start for the FTSE 100 so far, up four points to 10,613 so far.
Top of the risers is SSE, up 2.9% after the government confirmed plans to move older wind and solar farms onto fixed-price contracts.
British Land is next, up 2.2% as it nudged up its outlook after a solid year. Land Sec has been dragged up too.
Centrica, Compass, Experian, RELX and Bunzl are among the other top risers, climbing 1.8%-1%.
AB Foods is down 4.2% after confirming its plan to split in two.
Other fallers include housebuilders Barratt Redrow and Persimmon, and drugmakers GSK and AstraZeneca, all down over 1%.
7.50am: What the jobs data means for the BoE
Data from the Office for National Statistics this morning shows the labour market was "not loosening as much as feared in the months leading up to the Iran war", says economist Rob Wood at Pantheon Macroeconomics.
This "will limit the number of MPC rate cuts that are possible if oil prices fall back, and tip the balance towards rate hikes if oil prices stay high".
Overall data was mixed, he says, with wage growth slowing, payrolls falling, but unemployment dropping. "But the takeaway is a hawkish one in our view."
Wood says payrolls data is "likely" to be revised to be nearly flat in March, "a decent result given the war", while private wage growth was as expected.
"The big surprise was a drop in unemployment, which the MPC had turned their focus to in February."
7.45am: AB Foods confirms Primark split
Associated British Foods will split its business in two, confirming plans to demerge its Primark retail arm from its food operations.
Following a strategic review launched in November, the FTSE 100 group said shareholders will receive stakes in both separately listed companies, with Primark and the remaining food business, to be known as FoodCo, expected to also join London's blue-chip index.
The demerger is targeted for completion before the end of 2027, subject to approvals, and will be carried out via a dividend distribution to shareholders.
7.34am: Why is oil falling?
Uncertainty remains over what will happen when the two-week ceasefire agreement comes to an end on Wednesday evening, Washington time, says market analyst Ipek Ozkardeskaya at Swissquote.
With futures back in positive territory this morning on hopes that the US and Iran will reach an agreement before the Wednesday deadline, she says thsi would match pattern seen for much of the past two months
"Tensions rise over the weekend, markets sell off on Monday, hesitate on Tuesday, sentiment improves on optimistic – but not necessarily substantiated – announcements from the US, markets rally into Friday, and the weekend brings fresh bad news.”
But why are oil prices seeping lower when the Strait of Hormuz remains closed and prolonged disruptions are expected to constrain energy supply for months?
Ozkardeskaya notes that Kuwait Petroleum Corp declared force majeure yesterday on crude and refined product shipments, saying it won’t be able to meet full obligations due to circumstances beyond its control.
She says it would "take years" and sustainably higher oil prices compared to pre-war levels for other producers like Brazil, Guyana, Suriname and Venezuela to help fill the gap.
"So why the pullback? Is it just hope? The answer is likely no. Hope plays a role, but other factors are at work.
"First, releases from strategic reserves may have temporarily supported supply, though these buffers are diminishing.
"But more importantly, demand destruction is already underway. Reports suggest European refineries, for example, have reduced demand due to higher input costs – putting downward pressure on prices."
Oil prices "cannot rise indefinitely," she says, "as higher prices ultimately curb demand."
7.23am: UK unemployment rate falls
The UK unemployment rate fell to 4.9% in February from 5.2% in January, the Office for National Statistics reveals, below the consensus forecast of 5.2%.
Average weekly earnings excluding bonuses grew 3.6% in the three months to February compared to a year ago, down from 3.8% in January and above the consensus estimate of 3.5%.
Private sector ex-bonus pay rose 3.2%, down from January’s 3.3% gain and in line with the 3.2% consensus.
“The number of workers on payroll remained broadly flat in recent periods, reflecting ongoing weak hiring," says Liz McKeown, ONS director of economic statistics.
"Vacancies fell to their lowest level in almost five years, but with unemployment also falling the number of vacancies per unemployed person remains broadly unchanged.
"Alongside falling unemployment, the number of people not actively seeking work increased, with data suggesting fewer students seeking work alongside their studies.
"Regular wage growth has slowed further with growth at its lowest rate in over five years."
7.17am: FTSE 100 tipped for small rebound
The FTSE 100 and other European stock benchmarks look set to bounce back on Tuesday as hope grows that Iran will join the US in Pakistan for peace talks.
There has been no confirmation that Iran will take part in talks before Wednesday, when the current ceasefire agreement ends.
Reports have variously revealed an official saying Iran is considering attending the negotiations, the foreign ministry saying no decision had been made and the parliamentary speaker saying Iran is ready for negotiations but not under terms imposed by the US.
Oil prices have been on a slight downward trend since rebounding at the start of the week. Brent crude is down 1% at $94.62 a barrel.
Ahead of the open, London's blue-chip index has been called 10 points higher, which would chip away at some of the losses from the previous day, when it fell almost 59 points to 10,609.08.
US stocks pulled back overnight, with the Nasdaq slipping 0.3%, the S&P 500 softening 0.2% and the Dow Jones just below flat.
Asian stocks are mostly positive this morning, with Japan's NIkkei up 0.9% and India's Sensex climbing 0.7%, but the Shanghai Composite down 0.1%.
UK jobs data is out this morning, showing the headline unemployment rate fell to 4.9% in February, from 5.2% in January, below the consensus forecast of 5.2%. More on that shortly.