London’s FTSE indexes experienced a decline of over 1% on Thursday, as persistent uncertainty regarding a possible resolution to the Middle East conflict negatively impacted market sentiment. U.S. President Donald Trump asserted that Iran was eager to negotiate a resolution to the ongoing conflict that has persisted for nearly four weeks. This statement stands in contrast to the remarks made by Iran’s foreign minister, who indicated that Tehran was considering a U.S. proposal but had no intentions of engaging in discussions to de-escalate the situation. The blue-chip FTSE 100 index fell 1.1% by 1013, ending a two-day winning streak, while the midcap FTSE 250 declined by 1.2%.
Most FTSE 350 sub-indexes traded in the red, except the energy index, which gained 0.6% as oil prices clawed back losses from the previous session on worries that prolonged fighting in the Middle East could further disrupt energy flows. Precious metal miners fell 4.4% as gold prices weakened amid uncertainty surrounding the conflict. Britain’s economic growth prospects this year experienced the most significant downgrade among major economies in the OECD’s interim forecast update, following the U.S.-Israeli conflict concerning Iran, while inflation is also expected to increase at a quicker pace.
Markets have incorporated expectations for two or three quarter-point increases from the Bank of England this year, marking a significant shift from earlier in the year when investors anticipated rate reductions. Next rose 5.1% to the top of the benchmark after CEO Simon Wolfson stated that the clothing retailer has not observed a significant decline in UK sales since the onset of the U.S.-Israeli war on Iran at the end of February.
Currys fell 8.4% after the electrical retailer announced that CEO Alex Baldock will step down, concluding a tenure that achieved a turnaround in profit and margins for the company. 3i Group opens new tab fell 7.6% after the private equity firm said that its discount retailer Action expects like-for-like sales growth between 4% and 5% in 2026, broadly similar to the 4.9% growth it recorded in 2025.