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London midday: Oil and mining stocks drag UK markets lower

(Sharecast News) - Losses in the mining and oil sectors were providing a drag on London's FTSE 100 on Monday, as investors scaled back their appetite for risk in light of rising geopolitical tensions in the Middle East. In a retaliation for a strike on the Iran consulate in Damascus, Iran launched more than 300 drones and missiles at Israel on Sunday evening, though nearly all were intercepted by air defence operations with the help from US, UK, France and Jordan.

Markets will now be watching how Israel responds. The US has warned Israel that it would not join in with any retaliatory action, while UN secretary general Antonio Guterres urged for "maximum restraint", adding: "Now is the time to defuse and de-escalate. Neither the region nor the world can afford more war."

Just before midday in London, the FTSE 100 was down nearly 0.5% at 7,958.

Oil prices were heading lower as the potential impact from this weekend's tensions was seen to be limited. Brent was down 0.9% at $89.67 a barrel in morning trade. Meanwhile, gold prices were retreating after reaching fresh record highs last week, with Comex futures down 0.3% at $2,367.20 an ounce, causing some profit-taking in the precious metals sector.

London's greater exposure to the energy and mining sectors was evident on Monday, as UK-listed stocks underperformed the rest of Europe, with equity markets in Paris, Frankfurt and Milan rising between 0.7% and 1%.

"Much of this market confidence appears to be associated with the claims that Iran provided plenty of notice of their impending attack, raising the likeliness that it was more about saving face rather than a declaration of war," said Joshua Mahony, chief market analyst at Scope Markets.

"Nonetheless, with the flow of commodities largely undisturbed by the weekend's activities, calls for a sharp spike in energy prices have been cast aside for now."

Market movers

Airlines easyJet and IAG were the best performers on the FTSE 100 after the impact from Middle Eastern geopolitics on oil prices wasn't as bad as feared. In contrast, energy producers BP and Shell were both tracking the price of crude lower.

Also lower was Fresnillo, the precious metals producer, with investors taking profits after the stock had soared by a third over the past month on the back of record gold prices. Others in the sector, such as Anglo American and Glencore, were also out of favour.

After an initial fall, B&Q and Screwfix owner Kingfisher gained after revealing that chair Andrew Cosslett will step down after seven years at the helm of the board.

PageGroup shares dropped nearly 7%% after the recruitment firm posted lower first-quarter gross profit as the economic slowdown continued to hit the jobs market. Gross profit for the first three months of the year fell 12.9% to £219.7m on an annual basis, with UK and Asia-Pacific operations down 19.2% and 22% respectively.

Shares in Inchcape raced 5% ahead after the automotive distributor announced the disposal of its UK Retail operations to Group 1 Automotive UK for £346m, and unveiled plans to return £100m to shareholders by way of a buyback programme.

Market Movers

FTSE 100 (UKX) 7,958.45 -0.46% FTSE 250 (MCX) 19,744.97 0.12% techMARK (TASX) 4,466.57 -0.06%

FTSE 100 - Risers

IMI (IMI) 1,795.00p 1.70% BAE Systems (BA.) 1,337.50p 1.44% Melrose Industries (MRO) 651.80p 1.24% JD Sports Fashion (JD.) 120.05p 1.14% Prudential (PRU) 714.20p 1.10% Phoenix Group Holdings (PHNX) 509.00p 1.09% Weir Group (WEIR) 2,052.00p 1.08% Rightmove (RMV) 527.80p 1.00% Auto Trader Group (AUTO) 693.60p 0.90% DCC (CDI) (DCC) 5,620.00p 0.90%

FTSE 100 - Fallers

Fresnillo (FRES) 601.00p -3.45% BP (BP.) 523.10p -2.97% Centrica (CNA) 130.60p -2.03% Shell (SHEL) 2,880.50p -1.92% Glencore (GLEN) 477.65p -1.66% Pershing Square Holdings Ltd NPV (PSH) 4,030.00p -1.27% Anglo American (AAL) 2,175.50p -1.18% Entain (ENT) 811.60p -1.12% Rentokil Initial (RTO) 448.10p -1.08% National Grid (NG.) 1,026.50p -1.06%

FTSE 250 - Risers

Mitie Group (MTO) 120.00p 7.53% Crest Nicholson Holdings (CRST) 197.70p 4.77% Inchcape (INCH) 730.50p 4.58% Kainos Group (KNOS) 987.00p 2.49% Kier Group (KIE) 127.20p 2.25% Future (FUTR) 685.00p 2.16% Bridgepoint Group (Reg S) (BPT) 257.40p 2.14% Games Workshop Group (GAW) 10,060.00p 2.13% Darktrace (DARK) 469.00p 2.11% IWG (IWG) 182.10p 2.07%

FTSE 250 - Fallers

Pagegroup (PAGE) 454.80p -6.07% North Atlantic Smaller Companies Inv Trust (NAS) 3,530.00p -4.59% Vietnam Enterprise Investments (DI) (VEIL) 578.00p -3.83% Hays (HAS) 92.90p -3.73% Diversified Energy Company (DEC) 1,095.00p -2.84% Endeavour Mining (EDV) 1,795.00p -2.60% Harbour Energy (HBR) 288.20p -2.60% Ashmore Group (ASHM) 183.10p -2.55% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 472.00p -2.48% SThree (STEM) 422.00p -2.31%

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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