4th Mar 2026 17:00
(Alliance News) - European stocks rallied on Wednesday after two days of heavy losses, and energy prices retreated, as investors await the latest developments in the Middle East.
"More stability on the markets is welcome not only for sentiment but also as it might give certain investors the confidence to go hunting for bargains and drive a new wave of buying," commented AJ Bell analyst Russ Mould.
The FTSE 100 index ended up 83.52 points, 0.8%, at 10,567.65.
The FTSE 250 closed up 202.46 points, 0.9%, at 22,896.67 and the AIM All-Share rose 8.13 points, 1.0%, at 794.56.
The Cboe UK 100 was up 0.9% at 1,050.00, the Cboe UK 250 was 0.6% higher at 20,129.66, but the Cboe Small Companies Index declined 0.6% to 18,019.33.
Sentiment was boosted on the back of a New York Times report that operatives from Iran's Ministry of Intelligence have reached out indirectly to the CIA with an offer to discuss terms for ending the conflict.
According to the NYT, citing officials briefed on the outreach, US officials are sceptical - at least in the short term - that either the Trump administration or Iran is really ready for an "offramp".
Separately, AFP reported Qatar Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani held a call with Iran's Foreign Minister Abbas Araghchi on Wednesday, urging "an immediate halt" to attacks against Gulf states.
With the crisis entering its fifth day, the oil price cooled a touch.
On Tuesday, President Donald Trump had said Tuesday the US Navy was ready to escort oil tankers through the crucial Gulf shipping route.
Brent oil traded lower at USD80.75 a barrel on Wednesday afternoon, down from USD83.06 at same time on Tuesday.
David Morrison at Trade Nation said: "Oil is arguably the most useful barometer of sentiment currently, given that it plays such a fundamental role in all aspects of the global economy, and that it feeds directly into inflation."
"The Strait of Hormuz may have been blocked by Iran's Islamic Revolutionary Guard Corps, but President Trump has vowed to help with the cost of shipping insurance and may provide naval support to tankers passing through this vital chokehold, if necessary. If there is evidence that shipping can get through the Strait safely by the weekend, that should play a major part in reducing tensions all round," he added.
In European equities on Wednesday, the CAC 40 in Paris closed up 0.9%, while the DAX 40 in Frankfurt advanced 1.7%.
On Wall Street, markets rallied. The Dow Jones Industrial Average was up 0.5%, the S&P 500 index was 0.7% higher, while the Nasdaq Composite climbed 1.3%.
US Treasury Secretary Scott Bessent said that Donald Trump's 15% global tariff is likely to be rolled out this week, as the president moves to rebuild his trade agenda after a major legal setback.
The Supreme Court last month struck down Trump's country-specific tariffs, which he imposed on allies and competitors alike, delivering a stinging rebuke of his signature economic policy.
Since then, the US leader has tapped a different law to impose a new 10% duty, and vowed to raise this level to 15%.
Asked when the hike will be implemented, Bessent told CNBC: "That's likely sometime this week."
Meanwhile, data showed the US services sector expanded more than analysts expected in February, logging its highest reading since mid-2022.
The services index of the Institute for Supply Management rose to 56.1% in February, up 2.3 percentage points from January's reading.
This came as the business activity, new orders and employment indexes all saw an acceleration in growth.
"The services sector is heating up," said ISM survey chair Steve Miller in a statement.
The dollar's recent strong run stalled. The pound was higher at USD1.3365 on Wednesday afternoon, up from USD1.3305 at the equities close on Tuesday.
The euro stood higher at USD1.1634, from USD1.1585. Against the yen, the dollar was trading lower at JPY157.01, compared to JPY157.80.
The yield on the US 10-year Treasury held steady at 4.07%, as did the yield on the US 30-year Treasury at 4.71%.
In the UK, the seasonally adjusted S&P Global UK services PMI activity index posted 53.9 for February, in line with the flash estimate, and down slightly from January's five-month record of 54.0 points.
"Business activity continued to pick up across the UK service economy in February, with growth holding close to the five-month high seen at the start of 2026," commented S&P Global Market Intelligence Economics Director Tim Moore.
The seasonally adjusted S&P Global UK PMI composite output index registered 53.7 in February, slightly lower than the 53.9 flash estimate but unchanged from January's reading, indicating steady output growth from the UK private sector.
On the FTSE 100, betting firm Entain rose 4.0% ahead of Thursday's full-year results, while trade exhibition organiser Informa recouped some of this week's hefty falls, climbing 4.2%.
Some of the week's heavy fallers nudged higher with British Airways owner IAG, up 2.0%, and Holiday Inn owner, IHG, up 1.5%.
But Weir had a day to forget, slumping 11%, after guidance and weaker orders than hoped sparked a sell-off.
Citi analyst Avinash Mundhra said the print was "disappointing", noting the Glasgow-based engineering company was 1% below official consensus on orders and revenue.
Stifel, which has a 'hold' rating on Weir noted there was "little by way of positive surprises."
But JPMorgan said it sees share price weakness as a "buying opportunity", reiterating an 'overweight' rating.
"We are not surprised to see the shares softer today, given the strong recent rally and elevated expectations following peer reporting. However, the overall tone on the call was positive with management optimistic on the broader mining outlook."
On the FTSE 250, Vistry slumped 25% after signalling the departure of Executive Chair & Chief Executive Greg Fitzgerald and warning that profit margins will likely narrow in 2026 as it offers incentives to boost sales.
Jefferies analyst Glynis Johnson said: "Medium term we believe Vistry should be well-placed to benefit from the government efforts to support affordable housing. However with FY26 guidance again tempering growth expectations, average daily net debt yet to pass its peak and a transition in Chair/CEO over the coming 18 months, investors may feel there is time to wait before getting involved."
Peel Hunt said it is cutting 2026 and 2027 pretax profit forecasts for Vistry by 11% and 9% to GBP275 million and GBP335 million respectively.
Gold climbed to USD5,142.25 an ounce on Wednesday from USD5,114.94 on Tuesday.
The biggest risers on the FTSE 100 were Metlen Energy & Metals, up 2.50p at 36.10p, St James's Place, up 63.50p at 1,331.50p, Rolls Royce, up 60.00p at 1,363.00p, Informa, up 32.60p at 811.60p and Entain, up 22.00p at 578.20p.
The biggest fallers on the FTSE 100 were Weir Group, down 362.00p at 3,040.00p, Barratt Redrow, down 10.40p at 329.10p, Diageo, down 45.00p at 1,520.00p, BP, down 11.75p at 481.25p, and Smith & Nephew, down 24.00p at 1,336.00p.
Thursday's global economic calendar has eurozone retail sales figures, a slew of construction PMI prints, plus weekly jobless claims data and a trade report in the US.
Thursday's UK corporate calendar has full-year results from insurers Admiral and Aviva, betting operator Entain, miner Endeavour Mining, consumer goods firm Reckitt Benckiser and pest control specialist Rentokil Initial.
By Jeremy Cutler, Alliance News reporter
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