26th Mar 2026 12:13
(Alliance News) - Stock prices in London were sharply lower at midday Thursday, as concerns over the UK's exposure to the Iran conflict, particularly through its reliance on energy imports, weighed on investor sentiment.
The FTSE 100 index was down 131.15 points, 1.3%, at 9,975.69. The FTSE 250 was down 250.91 points, 1.2%, at 21,224.54, and the AIM all-share was down 9.41 points, 1.3%, at 719.83.
The Cboe UK 100 was down 1.1% at 993.24, the Cboe UK 250 was down 1.0% at 18,427.44, and the Cboe small companies was marginally lower 16,925.73.
In the UK, the King's Speech, where the UK government will set out its legislative agenda for the coming year, will take place on May 13, it has been announced.
In European equities on Thursday, the CAC 40 in Paris was down 0.9%, while the DAX 40 in Frankfurt was down 1.4%.
The situation in the Middle East remains highly uncertain. Although markets attempted a rebound earlier this week, those gains proved short-lived.
Israel and Iran continue to exchange missile strikes, while the status of talks between the US and Iran remains unclear. A report from Axios said the US is preparing options for a potential "final blow" in Iran that could include ground forces and a major bombing campaign.
Meanwhile, President Donald Trump's deadline for Iran to reach an agreement to end the war by the end of the week is fast approaching.
Markets struggled with prolonged uncertainty, and the renewed sell-off suggests concerns over a drawn-out conflict are once again dominating investor sentiment.
Oil prices climbed after dipping below USD100 on Wednesday, with Brent trading at USD107.15 a barrel early Thursday, up from USD100.91 late Wednesday.
The pound was quoted at USD1.3333 at midday Thursday, lower than USD1.3377 on Wednesday. Against the euro, sterling rose to EUR1.1564 from EUR1.1558 a day prior.
The euro stood at USD1.1529, down from USD1.1572. Against the yen, the dollar was trading at JPY159.64, higher compared to JPY159.19.
The UK is set to face weaker economic growth and higher inflation this year, with a prolonged war in the Middle East risking global energy shortages and rising food prices, according to new forecasts.
The Organisation for Economic Co-operation & Development warned that the conflict has darkened the outlook for many of the world's largest economies.
Beyond oil and gas disruption linked to the Iran war, fertiliser shortages could drive food prices sharply higher if the conflict persists, the OECD said.
In its interim economic outlook, the OECD said UK consumer prices index inflation will be 1.5 percentage points higher this year than it had forecast just a few months ago.
It now expects UK inflation to average 4% in 2026, up from a previous forecast of 2.5% in December, before easing to 2.6% in 2027, revised up from 2.1%.
This would leave the UK with the second-highest inflation rate in the G7 this year, behind only the US.
The OECD also cut its UK gross domestic product forecast, predicting growth will be 0.5 percentage points lower in 2026 than previously expected, at 0.7%, before rising to 1.3% in 2027, unchanged from prior projections.
That places the UK second-lowest in the G7 for economic growth this year, ahead of only Italy.
Across the G20, which includes economies such as China, India and Saudi Arabia, growth is projected to soften in the near term before gradually picking up through 2027.
Chancellor Rachel Reeves responded to the report to say the war in the Middle East "is not one that we started, nor is it a war that we have joined", adding: "But it is a war that will have an impact on our country."
Miners were under pressure. In the FTSE 100, Anglo American fell 5.2% and Fresnillo lost 4.7% as gold prices slipped to USD4,421.475 an ounce early Thursday from USD4,554.59 on Wednesday.
Next was the standout performer in the FTSE 100, up 5.1% following positive annual results.
On the FTSE 250, Pollen Street rose 8.4% after reporting that assets under management increased in 2025, citing "sustained and growing fundraising momentum" across its private credit and private equity strategies. Assets under management climbed 30% to GBP7.1 billion at the end of 2025 from GBP5.4 billion a year earlier.
THG gained 7.1% as the online beauty and sports nutrition retailer swung to an annual post-tax profit.
Among smaller caps, Capita surged 16% after announcing the sale of its private sector contact centre business to Inspirit Capital, a move aimed at streamlining operations. The transaction is expected to generate annualised cost savings of around GBP40 million across 2026 and 2027.
Checkit jumped 23% after launching a formal sale process, citing a "disparity" between its improving performance and its AIM valuation. The company said it has received six unsolicited approaches from credible international parties over the past nine months.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.8%, the S&P 500 index down 0.8%, and the Nasdaq Composite down 1.0%.
The yield on the US 10-year Treasury was quoted at 4.38%, widening from 4.32% on Wednesday. The yield on the US 30-year Treasury was quoted at 4.94%, widening from 4.89%.
In Germany, consumer sentiment is set to deteriorate in April as the war in Iran weighs on income expectations and heightens inflation concerns, according to a survey from market research house GfK.
The consumer climate indicator is forecast to fall to minus 28.0 points for April from a revised minus 24.8 in March, a drop of 3.2 points.
GfK said the decline reflects rising concerns over higher energy prices and their impact on household finances, even as spending and saving behaviour remains relatively stable for now.
In the EU, the European Parliament gave conditional approval on Thursday to the bloc's tariff deal with the US.
A majority of lawmakers backed reducing EU levies on certain US imports under a deal struck last summer, which Brussels has pledged to honour, but attached additional safeguards.
Before the agreement can be implemented, it must still be negotiated with EU member states.
Still to come on Thursday's economic calendar are US weekly jobless claims, with initial claims due at 1230 GMT and consensus at 210,000 versus 205,000 the week prior
By Eva Castanedo, Alliance News reporter
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