Britain's main indexes gain over 1% on hopes of Middle East peace deal

Britain's shares edged higher on Friday after U.S. President Donald Trump said a peace agreement with Iran could be signed soon, while investors also assessed key economic data.

The blue-chip FTSE 100 index rose 1.1% to 10,414.02 points by 1059 GMT, while the midcap FTSE 250 climbed 1.5%. Both indexes were on track for weekly gains.

• The deal, if confirmed, could end the three-month-old war, which sent oil prices sharply higher after Iran blockaded the Strait of Hormuz, a vital artery for global energy supply.

• Most sub-indexes were in the green, except energy, which fell 3.6% after oil prices slipped more than 4% following the news. [O/R]

• Homebuilders led gains; Vistry Group was up 6.6%, and Bellway and Persimmon 4% each.

• The travel and leisure sub-index, which includes oil price-sensitive airlines, also advanced 3.6%. British Airways owner IAG and budget carrier Wizz Air Holdings were among the top gainers.

• On the data front, Britain's economy contracted 0.1% in April, its first monthly drop since August 2025, the Office for National Statistics (ONS) said.

• ONS data showed the first clear signs of an impact from the U.S.-Israeli war on Iran on the country's economic growth.

• "April's data hints at what is to come, a summer of sluggishness which could edge into a technical recession as global conflict collides with domestic political uncertainty," said Danni Hewson, head of financial analysis at AJ Bell.

• Separately, the British public's expectations for inflation in the long term rose to a record high last month, the Bank of England's quarterly inflation attitudes survey showed on Friday.

(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Sahal Muhammed)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 12, 2026 at 7:08 AM.