Published by Global Banking & Finance Review®
Posted on June 13, 2025
2 min readLast updated: January 23, 2026
Add as preferred source on GoogleFTSE 100 drops 0.4% due to Middle East tensions, with energy stocks rising and airlines falling. Investors await Bank of England's decision.
(Reuters) -London's FTSE 100 retreated on Friday after closing at a record high in the previous session as Israel's attacks on Iran ramped up geopolitical tensions, but gains in energy stocks limited declines.
The blue-chip FTSE 100 closed down 0.4%, less than 1% away from an intraday record high.
Israel launched strikes against Iran on Friday, targeting nuclear facilities and ballistic missile factories, to prevent Tehran from building an atomic weapon. The Islamic Republic insists it wants nuclear energy only for civilian purposes.
Israel said Iran had launched around 100 drones towards Israeli territory in retaliation on Friday, but Iran denied this and there were no reports of any drones reaching Israeli targets.
The development adds to caution among investors, who are already grappling with the impact of U.S. President Donald Trump's erratic tariff policies.
The heightened tensions sent prices of crude soaring about 6% and weighed heavily on travel and leisure stocks.
British Airways owner ICAG fell 3.7%, EasyJet dropped 2.7%, while Wizz Air was down 5.6%. Global airlines cleared out of airspace in the Middle East, diverting flights.
London-listed shares of cruise operator Carnival were down 3.4%.
Gains in commodity-linked stocks capped declines in the blue-chip index, with energy shares rising 0.8%, boosted by oil giants Shell and BP.
As investors flocked to safe havens, gold prices rose 1%, helping precious metal miners rise 2.8%.
The midcap FTSE 250 slid 1%, recording its steepest single-day fall in more than two months.
Gas producer Energean dropped 5.1% after it said it had temporarily suspended the production and activities of its power floating production storage and offloading located off northern Israel.
Markets will be looking ahead to the Bank of England's monetary policy meeting next week, where it is expected to keep interest rates on hold.
A central bank survey showed the British public's expectations for inflation over the medium term remained at the highest in several years although short-term expectations fell.
(Reporting by Purvi Agarwal in Bengaluru; Editing by Shailesh Kuber; Editing by Alison Williams)
The FTSE 100 retreated due to escalating geopolitical tensions from Israel's attacks on Iran, despite closing at a record high the previous session.
Gains in energy stocks limited the declines in the FTSE 100, with energy shares rising 0.8%, supported by oil giants Shell and BP.
The heightened tensions led to a 6% increase in crude prices and negatively impacted travel and leisure stocks, with major airlines experiencing significant drops.
Markets are anticipating that the Bank of England will keep interest rates on hold during its monetary policy meeting next week.
The survey indicated that the British public's expectations for inflation over the medium term remained at their highest in several years, although short-term expectations had decreased.
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