London's benchmark index moved lower on Friday as renewed confrontation between Washington and Tehran coincided with oil holding near multi-year highs. By 03:24 ET (07:24 GMT) the FTSE 100 was trading down 0.36% at 10,341.54, with trading conditions in continental Europe partly muted by public holidays in Germany and France for May Day.
U.S. President Donald Trump escalated rhetoric around a naval blockade of Iranian ports, a stance he reinforced after a briefing on contingency operations. Axios reported that Admiral Brad Cooper and General Dan Caine briefed the president on potential strike options aimed at breaking a negotiating impasse.
Iranian officials have responded sternly. Supreme Leader Mojtaba Khamenei reiterated a commitment to maintain the countrys nuclear and missile capabilities, while President Pezeshkian labelled the blockade "intolerable." A Foreign Ministry spokesman, Esmaeil Baghaei, warned that expecting rapid results from talks was "not very realistic." Separately, a senior figure in the Revolutionary Guards threatened "long and painful strikes" on U.S. positions if American attacks were renewed.
In a diplomatic aside, President Trump removed tariffs on UK whiskey to mark King Charles's state visit, posting on Truth Social that "The King and Queen got me to do something nobody else was able to do."
Corporate updates offered a mixed picture for the UK economy. NatWest reported a 12% rise in first-quarter profit to A32 billion, beating analyst expectations, and nudged its full-year income guidance toward the top of its A317.2-17.6 billion range. Bank of Ireland reiterated its full-year guidance after net loans rose at an annualised 5% to AC83.60 billion and its non-performing exposure ratio declined to 2%.
Education group Pearson said underlying first-quarter sales increased by 4% as demand for virtual learning remained strong, and it signalled it was on course for the full year. By contrast, data compiled by BDO showed British discretionary retailers experienced a 1.6% year-on-year fall in like-for-like sales in April, their weakest reading in a decade outside the pandemic period. BDO attributed part of the weakness to higher fuel costs linked to the Iran conflict and to weak consumer confidence.
On the housing front, Nationwide reported an unexpected monthly house price rise of 0.4% in April, leaving prices 3% above year-earlier levels. However, surveyors flagged softer demand and noted that March saw the broadest monthly price decline since January 2024.
Taken together, the market reaction on Friday reflected a combination of geopolitical risk feeding through to energy prices and mixed domestic economic indicators. Energy-sensitive sectors and consumer discretionary names appeared more exposed to the near-term uncertainty, while banks posted resilient results that offered some counterbalance to the downward pressure on the broader index.