Stocks slide and oil spikes as peace talks falter

UK stock markets declined and oil prices spiked on Monday following Iran’s announcement that it had suspended peace talks with US mediators. The FTSE 100 closed 0.7% lower at 10,338.95, while the FTSE 250 fell 0.8% and the AIM All-Share dropped 0.2%. Iranian news agency Tasnim reported the suspension, blaming Israel’s expanded offensive in Lebanon and its military operations in Gaza. Iran demanded Israel end its actions in Lebanon and withdraw from occupied areas, warning it would block the Strait of Hormuz and activate other fronts, including the Bab al-Mandab Strait. Brent crude prices jumped to $97.22 per barrel, up from $91.62 on Friday, reflecting heightened geopolitical risks. European markets also declined, with the CAC 40 in Paris down 0.5% and the DAX 40 in Frankfurt off 0.4%. In New York, the Dow Jones fell 0.3%, the S&P 500 remained flat, and the Nasdaq rose slightly by 0.2%. UK manufacturing activity expanded at its fastest pace in four years in May, according to S&P Global, though firms faced cost pressures and supply chain disruptions linked to Middle East conflicts. The UK manufacturing PMI rose to 53.9, its highest level since 2022, though sterling weakened slightly against the dollar and euro. Meanwhile, US Treasury yields rose, with the 10-year yield at 4.51% and the 30-year yield at 5.01%. On the FTSE 100, BP and Shell gained 2.7% and 2.5%, respectively, due to rising oil prices. The FTSE 250 saw Bluefield Solar Income Fund surge 16% after Drax agreed a £548 million cash offer, valuing the company at £1.08 billion. Applied Nutrition climbed 12% after raising its full-year revenue guidance to £148 million and announcing a US acquisition for $16 million. EasyJet rose 10% following confirmation of a strategic partnership with asset manager Castlelake.