London close: FTSE ends down but off lows amid renewed peace hopes

(Sharecast News) - London stocks ended down but off lows on Thursday, while oil prices pared gains following a report the US and Iran have reached an agreement on a 60-day memorandum of understanding to extend the ceasefire and launch negotiations on Tehran's nuclear programme.

The FTSE 100 closed down 0.8% at 10,425.96, while Brent crude was up just 0.2% at $94.45 a barrel following the report by Axios, which said Trump has yet to give his final approval. Citing two US officials and a regional source involved in the mediation efforts, Axios said Iran has also not confirmed its acceptance.

A US official told Axios: "This is an agreement to get everybody to the table. We will work out the details in the negotiations."

It was understood that terms of the deal were mostly agreed to as of Tuesday, but both sides still needed approval from senior leadership.

Axios said the US officials claimed the Iranians later came back and said they had the necessary approvals and were prepared to sign. Iran has not confirmed that.

Axel Rudolph, chief technical analyst at IG, said: "Reports that the US and Iran have agreed on a 60-day framework to extend the ceasefire and restart talks over Tehran's nuclear programme have provided markets with cautious optimism - propelling several US stock indices to fresh records - although the proposed agreement still requires final approval from President Trump before it can formally proceed."

Earlier in the day, sentiment was hit after the US and Iran exchanged military strikes. The US targeted a military site in the port city of Bandar Abbas and shot down four Iranian one-way attack drones. Iran's Islamic Revolutionary Guard Corps (IRGC) said it had retaliated by targeting a US air base in Kuwait.

In equity markets, shares of BT Group slumped following a report the UK government would oppose any attempt from Indian billionaire Sunil Bharti Mittal to increase his stake in the telecoms group.

Johnson Matthey fell slightly as it announced the acquisition of Cormetech, a US manufacturer of selective catalytic reduction catalysts, for an enterprise value of $360m. The deal was announced alongside full-year results, which showed that operating profit was in line with previously upgraded guidance.

Vesuvius ended the session flat following a day of heavy losses. The molten metal flow engineer said revenue and trading profit over the first four months of the year were slightly ahead of last year on a constant currency basis, and backed its expectations for the full year.

The earlier losses were likely due to the fact it was trading ex-dividend, along with a host of other stocks including Kingfisher, National Grid, Severn Trent, AB Foods, Hilton Foods, Breedon and Keller.

Utilities provider SSE nudged lower as it reported a small decline in annual profits but adjusted earnings at the upper end of guidance.

On the upside, defence firms Babcock, BAE Systems, Rolls-Royce and Chemring were among the top performers.

PPHE Hotel surged after saying it had received a £22 per share takeover proposal from Israel's Fattal Hotel Group which it deems to represent fair value.

Computacenter gained after saying it had bought Government Acquisitions (GAI), a value-added reseller focused on the US federal government market, for up to $92m.