Late market roundup: FTSE falls as oil tops USD100 on Iran fears

London stocks retreated on Thursday as Brent crude climbed above USD100 a barrel for the first time since May after fresh attacks in the Red Sea fuelled fears of a wider Middle East conflict, while a hawkish European Central Bank added to investor caution.

The FTSE 100 index closed down 77.80 points, 0.7%, at 10,639.17. The FTSE 250 ended down 299.30 points, 1.3%, at 23,627.33, and the AIM all-share closed down 6.32 points, 0.8%, at 768.76.

The Cboe UK 100 was down 0.8% at 1,057.23, the Cboe UK 250 was down 1.2% at 20,556.45, and the Cboe small companies was 0.3% lower at 18,468.71.

In European equities on Thursday, the CAC 40 in Paris closed down 1.6%, while the DAX 40 in Frankfurt ended 1.6% lower.

The pound was lower at USD1.3303 on Thursday afternoon from USD1.3377 at the equities close on Wednesday. Against the euro, sterling was lower at EUR1.1696 from EUR1.1717 a day prior.

The euro stood lower at USD1.1370 from USD1.1410. Against the yen, the dollar was trading higher at JPY163.88 compared to JPY163.12.

Brent oil topped USD100 a barrel on Thursday for the first time since May, after Yemen's Iran-backed Houthi rebels struck oil tankers in the Red Sea

Brent oil was higher at USD100.98 a barrel on Thursday afternoon, from USD93.74 late Wednesday.

US President Donald Trump said he would hold Iran responsible for attacks on shipping by Houthi rebels and threatened both with "major military punishment."

"The US will hold Iran responsible, in that the Houthis are a Surrogate and/or Proxy of Iran, and major military punishment will be inflicted upon Iran and, of course, the Houthis themselves" should the rebels launch further attacks, Trump said on his Truth Social network.

Meanwhile, the European Central Bank on Thursday kept interest rates unchanged, as expected, but signalled growing concern that higher energy prices could reignite inflation.

As expected, the Governing Council left the deposit facility rate at 2.25%, the main refinancing operations rate at 2.40% and the marginal lending facility rate at 2.65%.

During her press conference, President Christine Lagarde struck a hawkish tone, suggesting the surge in energy prices following the renewed Middle East conflict could ultimately require another interest rate hike as soon as September.

While the accompanying statement stressed that policymakers remain data-dependent and are "not pre-committing to a particular rate path", Lagarde's press conference suggested the bar for another increase has fallen sharply since the ECB's June meeting.

Despite the growing inflation risks, Lagarde said recent economic data had been somewhat more encouraging than feared.

Stocks in New York were lower. The Dow Jones Industrial Average was down 1.3%, the S&P 500 index was 1.6% lower, and the Nasdaq Composite lost 2.7%.

The yield on the US 10-year Treasury widened to 4.71% on Thursday from 4.65% on Wednesday. The yield on the US 30-year Treasury stretched to 5.18% from 5.14%.

US jobless claims unexpectedly fell in the most recent week, data from the US Department of Labour showed.

The latest number of new unemployment insurance claims was 187,000 in the week that ended July 18, down by 22,000 from last week's figure of 209,000, which was revised up by 1,000 from 208,000.

The latest reading was lower than the FXStreet-cited consensus of an increase to 212,000 jobless claims.

Continuing jobless claims fell by 2,000 to 1.796 million in the week that ended July 11, with the previous week's figure revised down by 7,000 to 1.798 million.

Back in London, oil majors were higher as the price of Brent continued to climb. BP was up 3.1% while Shell gained 1.6%.

Segro led the way on the FTSE 100, gaining 6.5% after it said it is prepared to recommend Prologis's "best and final" takeover proposal.

The latest proposal for the warehouse property investor comprises 0.0920 new Prologis shares for each Segro share, alongside a partial cash alternative of up to £3.5 billion, representing 25% of the total consideration.

Based on Prologis' closing share price on Tuesday and prevailing exchange rates, the proposal values Segro at 1,031.70 pence per share, or around £14.0 billion.

Shares in Centrica fell the most on the FTSE 100 and sank 10% after it reported lower operating profit and revenue in the first half of 2026.

The Windsor, England-based energy supplier, which owns British Gas, reported a pretax profit of £672 million in the six months ended June 30, swinging from a £43 million loss the year prior.

Adjusted operating profit fell 9.5% to £497 million from £549 million, below the £485 million consensus. Adjusted earnings before interest, tax, depreciation and amortisation declined 18% to £737 million from £900 million, missing the £775 million consensus.

For 2026, Centrica expects Retail to be towards the lower end of £500 million to £800 million adjusted Ebitda guidance range, Optimisation to deliver adjusted Ebitda of around £250 million and Infrastructure to generate adjusted Ebitda of £650 million to £750 million.

For 2027, the FTSE 100 said "a wide range of outcomes" are possible for Centrica Energy.

As a result, it expects Ebitda at Centrica Energy to be around guidance for 2026 of £200 million to £250 million, which is below current consensus of £298 million, cited by RBC Capital Markets.

On the FTSE 250 index, shares in CVS Group sank 6.0%.

The Norfolk, England-based provider of veterinary services said revenue rose 5.9% to £712.8 million in the financial year ended June 30 from £673.2 million a year prior.

However, looking ahead, CVS said: "The economic backdrop in the UK remains challenging with low consumer confidence impacting footfall in companion animal practices.

"However, with the expansion in Australia progressing well, the UK Competition & Markets Authority process drawing to an end, and the structurally favourable dynamics of the sector, CVS remains well positioned to deliver attractive growth in shareholder value over the medium and long-term."

Shares in Mitchells & Butlers ended 5.1% lower after it reported flat sales for the third quarter, and said the heatwave hurt its food-led businesses.

The Birmingham, England-based restaurant and pub operator said in the third quarter to July 18, like-for-like sales were flat. Drink sales increased 2.6% while food sales fell 2.4%.

Mitchells & Butlers said "challenging weather conditions" moderated its performance in the third quarter against "strong comparatives".

It said performance in the quarter was affected by the timing of Easter, which fell in the third quarter last year. This caused a 0.8 percentage point headwind to like-for-like sales growth.

"Several extended periods of extreme heat also had an adverse impact on trading," Mitchells & Butlers said.

On the AIM market, shares in Mission Group finished up 24%.

The Devon, England-based owner of a group of digital marketing and communications agencies said its performance for the first half of 2026 was in line with expectations, with headline operating profit before adjustments expected to be up 10% at £2.4 million from £2.2 million in 2025.

The firm also expects headline pretax profit to rise 27% to £1.4 million from £1.1 million, but for revenue to total £32.5 million, down from £34.1 million.

Mission said it enters the second half "with a strong new business pipeline," and said it continues to make progress against its key strategic growth priorities, including US expansion and further development of new business opportunities.

Gold fell to USD4,047.56 an ounce on Thursday from USD4,157.48 at Wednesday's close.

The biggest risers on the FTSE 100 were Segro, up 58.20p at 953.20p, 3i Group, up 122.00p at 2,674.00p, BP, up 16.60p at 555.90p, Anglo American, up 101.00p at 3,630.00p, and BAE Systems, up 41.00p at 1,965.00p.

The biggest fallers on the FTSE 100 were Centrica, down 18.40p at 161.40p, Fresnillo, down 163.00p at 2,497.00p, Endeavour Mining, down 179.00p at 3,564.00p, Antofagasta, down 175.00p at 3,621.00p, and Marks & Spencer, down 16.90p at 379.70p.

On Friday's economic calendar, there is a swathe of flash composite purchasing managers' index readings, including for the UK. There will also be UK retail sales data.

On Friday's UK corporate calendar, there are trading statements due from Taylor Maritime and DiscoverIE Group.

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