London stocks log weekly declines on geopolitical, rate uncertainty

FTSE 100 down 0.8%, FTSE 250 off 0.7%

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UK house prices fall for first time in 6 months

April 5 (Reuters) - The UK's main stock indexes recorded weekly losses on Friday against a backdrop of escalating Middle East tensions and a more cautious mood among investors following hawkish remarks from Federal Reserve officials.

The exporter-heavy FTSE 100 shed 0.8%, while the domestically focused FTSE 250 lost 0.7%. However, both the indexes picked up from their session lows after a stronger-than-expected U.S. jobs report raised hopes of a soft landing in the United States.

Markets globally were unsettled by news that Israel braced for the possibility of a retaliatory attack after its suspected killing of Iranian generals in Damascus this week, and Prime Minister Benjamin Netanyahu said the country would harm "whoever harms us or plans to harm us".

"Investors are having to seriously consider the potential that what's going on in the Middle East will get worse before it gets better and comments from the Israeli Prime Minister have stoked fears that there is going to be a much wider impact," Danni Hewson​​​​, head of financial analysis at AJ Bell, said.

Oil prices extended gains on Friday and were headed for a second weekly gain. That in turn lifted the FTSE 350 energy sector but weighed on the travel sector .

Wall Street sold off sharply on Thursday after Minneapolis Fed President Neel Kashkari said that if inflation continues to stall, no rate cuts may be required at all by year end.

Most developed world equity markets have posted strong gains since late last year on hopes that major central banks will start easing monetary policy.

Investors currently expect the Bank of England to start cutting rates in June or August.

British house prices fell 1% in March, their first drop since September 2023, figures from mortgage lender Halifax showed.

Among individual stocks, Rio Tinto slipped 2.4% after shareholders demanded the company come clean on environmental issues.

Ocado Group slid almost 9%, extending losses for a second session, after the online supermarket announced Chairman Rick Haythornthwaite would step down. (Reporting by Pranav Kashyap, Khushi Singh and Sruthi Shankar in Bengaluru; Editing by Savio D'Souza, Shounak Dasgupta and Jane Merriman)