London equity markets moved higher on Friday as headlines suggesting progress toward a U.S.-Iran settlement helped calm risk sentiment, offsetting a mixed set of UK growth numbers that included the first monthly contraction in nearly a year.
The FTSE 100 was up 0.85% as of 3:27 ET (7:27 GMT). European peers followed suit, with Germany's DAX rising 1.33% and France's CAC 40 climbing 1.47%. Sterling slipped 0.17% versus the dollar to $1.3394.
Energy markets eased on the diplomatic momentum. Brent crude retreated 1.96% to $88.61 a barrel and WTI fell 1.79% to $86.13 a barrel, reflecting reduced near-term supply anxiety linked to reports of a potential settlement. Spot gold also eased, down 0.76% to $4,179.15 a troy ounce.
Domestic growth data
Data from the Office for National Statistics indicated that the UK economy expanded by 0.7% in the three months to April 2026, marking the fifth straight quarter of three-month-on-three-month growth and an acceleration from the prior period's 0.6% gain. However, on a month-on-month basis the economy contracted by 0.1% in April - the first monthly decline since August 2025.
The monthly downturn was driven by a 0.2% fall in services output, which outpaced a 0.1% gain in construction. The ONS flagged that some of this monthly softness may be attributable to the Middle East conflict, citing cancelled sporting events and weaker turnover in manufacturing, wholesale and travel businesses.
Diplomatic developments and reactions
U.S. President Donald Trump described a "great settlement" with Iran on Thursday, saying the conflict was effectively over and that a signing ceremony could occur as soon as this weekend in Europe. He said the agreement would reopen the Strait of Hormuz, extend a ceasefire for 60 days and defer nuclear discussions to a subsequent stage.
Tehran's response was measured: Iran's foreign ministry characterized reports of a concluded agreement as "merely speculation," stating that Iran had not yet made a final decision. Separately, Al Arabiya reported that Tehran had signalled approval of a draft text through Qatari mediators.
The diplomatic developments came after a turbulent 24 hours: earlier on Thursday, Trump had threatened to seize Kharg Island - which handles about 90% of Iran's crude exports - and take control of Iran's oil and gas markets. He later said he was unsure whether "America has the appetite" for such an operation. NBC News reported U.S. military plans had been within three hours of strikes inside Iran before Trump called off the operation.
Company-level moves in the UK
On the domestic corporate front, Flutter Entertainment said it intends to delist its ordinary shares from the London Stock Exchange effective August 3, having concluded the move is in the best interests of the company and its shareholders. The firm's shares will continue to trade on the New York Stock Exchange under the ticker symbol FLUT.
Consumer cleaning products manufacturer McBride warned that the conflict in the Middle East had driven sustained cost increases in petrochemical-derived and other energy-intensive inputs beyond earlier expectations. McBride now expects adjusted EBITA for FY26 and FY27 to come in 5% to 10% below current analyst forecasts, while noting it anticipates performance to normalise into the second quarter of FY27 and beyond.
Market context and implications
Friday's market moves reflected a balancing act between easing geopolitical risk and lingering domestic weakness. The rally in equities and the decline in benchmark oil and gold prices indicate investors were pricing in a lower near-term risk premium tied to the Middle East. At the same time, the ONS monthly GDP dip highlighted that certain domestic sectors - notably services, manufacturing, wholesale and travel - were vulnerable to externally driven disruptions.
Investors and corporate managers will likely monitor whether the tentative diplomatic signals solidify into a formal agreement and whether the uplift in sentiment proves durable given the ONS observation that some activity was already dented by the conflict.
Data snapshot
- FTSE 100: +0.85% (as of 3:27 ET / 7:27 GMT)
- DAX: +1.33%
- CAC 40: +1.47%
- Sterling: -0.17% to $1.3394
- Brent crude: -1.96% to $88.61 / barrel
- WTI crude: -1.79% to $86.13 / barrel
- Spot gold: -0.76% to $4,179.15 / troy ounce
- UK three-month GDP: +0.7% to April 2026 (quarter on quarter)
- UK monthly GDP: -0.1% in April 2026
This piece synthesises market moves, official statistics and company statements to capture how diplomatic headlines and domestic data interacted to shape trading on Friday.