British equities moved higher on Tuesday as markets reacted to indications of diplomatic engagement between the United States and Iran, even while tensions over a proposed Gaza transition plan introduced points of public friction that could complicate regional stability.
Market snapshot
The FTSE 100 was up 0.55% as of 03:31 ET (07:31 GMT). Germany's DAX gained 0.81% and France's CAC 40 rose 0.43%. Sterling was largely unchanged at $1.3436, a 0.02% increase from prior levels.
Diplomatic backdrop
Investor sentiment appeared encouraged by remarks suggesting some level of engagement between Washington and Tehran. At the same time, public disagreement between Israeli and U.S. leadership over a Gaza transition framework injected a note of uncertainty.
Israeli Prime Minister Benjamin Netanyahu openly disagreed with U.S. President Donald Trump on the terms of a Gaza roadmap, stating that Hamas must be fully disarmed before reconstruction can begin. Netanyahu made the comment after meeting former U.N. Middle East envoy Nickolay Mladenov, according to Al Jazeera.
The Prime Minister's Office spokesman Doron Spielman said the publicly released roadmap "does not reflect Israel's positions," a statement that contrasts with statements from Board of Peace officials who said Israel had been briefed "extensively" while the deal took shape. That apparent contradiction remained unresolved across the sources reviewed for this report.
The Board urged that any IDF withdrawal beyond the so-called "Yellow Line" - a military zone roughly 10km north of the Israeli border inside southern Lebanon - would take place only after all weapons and tunnels had been decommissioned, which it said was in line with commitments made by Hamas to mediators.
Public statements and mediation
Comments from U.S. and regional figures added to the patchwork of messages influencing markets. Speaking from the Oval Office on Monday, President Trump said the Strait of Hormuz could fully reopen "by tomorrow" as Phase 1 of talks with Iran, with denuclearisation to follow as Phase 2. He described the paused strike as larger than "any attack since World War II." On Truth Social, he reiterated that "nothing gets through to Iran unless we want it to, and nothing will get through unless a Deal, or Total Surrender, is accomplished," and restated that Iran would never possess a nuclear weapon.
Iran's Foreign Ministry spokesman Esmail Baghaei denied that negotiations were taking place and described a new Iran-Oman maritime arrangement through the Strait as a technical vessel-safety measure.
Separately, retired U.S. General Jack Keane told Fox News earlier on Tuesday that Pakistan and Qatar were "compromised" as mediators in talks with Iran because they favored Tehran over Washington, and he alleged Saudi Arabia had denied the U.S. access to its airbases while advocating restraint.
Commodities
Energy and precious metals prices rose alongside equities. Brent crude increased 1.4% to $84.94 a barrel, while WTI climbed 0.61% to $80.83. Gold futures were up 0.73% to $4,120.20 and spot gold rose 0.22% to $4,064.
UK corporate round-up
Several UK-listed companies released results or significant corporate news that moved stocks and sectors.
- BP - Second-quarter underlying replacement cost profit more than doubled to $5.73 billion, driven by higher oil and gas prices and stronger refining margins. The energy major increased its dividend and signalled a continued strategic focus on core oil and gas operations.
- HSBC - Reported stronger-than-expected first-half profit and raised its net interest income guidance, citing lending and wealth management growth. The bank also announced a share buyback of up to $1 billion and a second interim dividend.
- Metro Bank - Posted a 34% rise in H1 underlying pre-tax profit to A360.6 million, attributing the gain to growth in commercial, corporate and specialist lending. The lender reaffirmed its medium-term outlook and pointed to a record lending pipeline and expected margin support from treasury repricing.
- SIG - Recorded a 31% decline in H1 underlying operating profit as weak UK construction demand and higher costs weighed on results. The building materials supplier warned end markets were unlikely to recover this year and may remain subdued into 2027.
- Travis Perkins - Reported a 6.3% increase in H1 adjusted operating profit, helped by pricing actions and cost savings. The group said early progress in its turnaround plan is starting to offset challenging conditions in the construction market.
- Domino's Pizza Group - Delivered a 3.6% rise in H1 underlying core profit, supported by strong order volumes tied to major sporting events and continued resilience in takeaway spending.
- Smith+Nephew - Cut its full-year revenue growth forecast after weakness in its U.S. orthopaedics business offset strength elsewhere in the group.
- Segro - Agreed to a A314.3 billion takeover by Prologis, a deal that would create a logistics property group with a market value of about $138 billion. The agreement followed shareholder pressure to engage with the U.S. warehouse giant's proposal.
Market implications
Sentiment on Tuesday reflected a balance between relief that diplomatic channels may be open and caution about unresolved public disagreements that could affect regional security dynamics. Energy and gold markets moved higher, while corporate earnings and strategic deals influenced sector-level performance in the UK.
Investors will likely monitor further diplomatic statements and company updates closely to judge whether the current risk-off premium eases or geopolitical tensions reignite.