British equities traded cautiously higher on Friday, mirroring gains across Europe as market participants navigated a mix of diplomatic developments and persistent regional tensions. At 03:13 ET (07:13 GMT), the FTSE 100 was up 0.09%, Germany's DAX gained 0.16% and France's CAC 40 rose 0.45%. Sterling weakened 0.09% against the dollar to $1.3434.
Investor attention centred on a report that U.S. and Iranian negotiators have sketched out a draft agreement to extend a ceasefire by 60 days and to reopen the Strait of Hormuz while initiating formal talks over Tehran's nuclear programme. The report said the draft had not been signed and that U.S. President Donald Trump had yet to give final approval, telling mediators he wanted a couple of days to consider the matter.
Political signals from Washington offered cautious optimism but stopped short of confirmation. Vice President JD Vance told reporters that negotiators were "going back and forth on a couple of language points" and that whether the president would sign remained "still to be discussed." He added, "We're not there yet, but we're very close."
Those signs of diplomatic progress were set against continued military activity in the region. U.S. Central Command reported that Iran launched a ballistic missile toward Kuwait on Wednesday night in what the command described as an "egregious ceasefire violation." Kuwaiti forces reportedly intercepted the missile.
The missile launch followed reported U.S. strikes on an Iranian ground control site near Bandar Abbas and the interception of five Iranian attack drones that were reported to be threatening commercial shipping in the Strait. Governments including Kuwait, Saudi Arabia, Qatar, Egypt and the Organisation of Islamic Cooperation publicly condemned strikes on Kuwaiti territory.
Within Iran, political divisions complicated the picture. An Iranian lawmaker stated that the draft deal differed "180 degrees" from a 10-point framework prepared under the direct oversight of Supreme Leader Khamenei, and accused Washington of offering "a lollipop." The head of parliament's national security committee said that Iran's enriched uranium stockpile would not leave the country and indicated that Iran was pursuing permanent management of the Strait of Hormuz as a long-term policy.
State-linked media further undercut claims that an agreement was imminent. Tasnim News Agency, affiliated with Iran's Revolutionary Guards, reported that the memorandum of understanding text had neither been finalised nor confirmed, directly disputing Western media characterisations of a done deal.
Meanwhile, Washington continued to apply economic pressure. Treasury Secretary Scott Bessent announced sanctions on Iran's Persian Gulf Strait Authority under what he described as an "Economic Fury" campaign, warning companies or governments against paying Hormuz tolls. Bessent said U.S. warships had redirected 111 vessels as part of the blockade and that Iranian crude shipments had been pushed to record lows. He added that the U.S. did not have "unlimited patience," leaving the possibility of further strikes open.
Diplomatic engagements aimed at advancing talks were scheduled to continue. Senator Marco Rubio was set to meet Pakistan's Foreign Minister Ishaq Dar in Washington on Friday morning, with Islamabad described as a key mediator. Separately, Under Secretary of State Allison Hooker was due to meet Oman's ambassador, reflecting the ambassador's central role in discussions over the strait's legal status.
A Wall Street Journal report cited by market participants outlined elements said to be under consideration in the draft framework: phased sanctions relief, limited early access to frozen Iranian assets including funds held in Qatar, and a second phase addressing enrichment limits. The report emphasised that key details remained unresolved.
Traders and investors responded to the juxtaposition of diplomatic movement and military incidents by adopting a cautious stance. Small index gains reflected relief at the prospect of reduced immediate conflict risk, while the persistence of operational and political uncertainties kept risk appetite restrained across equity and currency markets.
Snapshot
- FTSE 100: +0.09% at 03:13 ET (07:13 GMT)
- DAX: +0.16%
- CAC 40: +0.45%
- Sterling: -0.09% to $1.3434
Context
Market participants are weighing a reported draft 60-day ceasefire extension and the possibility of formal talks over Iran's nuclear programme against ongoing military actions and new U.S. sanctions. Diplomatic contacts involving mediators and regional actors are continuing, but several Iranian officials and state-affiliated outlets say the draft text is far from final.