(Alliance News) - European stocks traded higher on Tuesday morning, with the mood lifted by Middle East peace talk hope, while the pound was back below USD1.34 after jobs data prompted stagflation fear.
The FTSE 100 index traded up 49.90 points, 0.5%, at 10,373.65. The FTSE 250 was up 122.84 points, 0.5%, at 22,734.54, and the AIM all-share edged up 0.89 of a point, 0.1%, at 801.06.
The Cboe UK 100 was up 0.7% at 1,031.41, the Cboe UK 250 added 0.8% at 19,690.05, and the Cboe small companies was up 0.4% at 18,545.69.
In Paris, the CAC 40 was up 0.5%, while the DAX 40 in Frankfurt added 0.6%.
US President Donald Trump on Monday touted a "very positive development" in talks with Iran, which convinced him to postpone a planned military attack on the Islamic republic.
Trump said allies in the Middle East told him "they are getting very close to making a deal" that would leave Iran without nuclear weapons.
"It's a very positive development, but we'll see whether or not it amounts to anything," Trump said during a White House event.
A barrel of Brent fell to USD110.43 early Tuesday, from USD110.80 at the time of the London equities on Monday.
The pound eased to USD1.3394 on Tuesday morning, from USD1.3397 late Monday afternoon. Against the euro, it climbed to EUR1.1511 from EUR1.1506. The euro eased to USD1.1630 from USD1.1643.
The Office for National Statistics said the unemployment rate rose back to 5.0% in the three months to March, from 4.9% in the period to February. According to consensus cited by FXStreet, it had been expected to stay at 4.9%.
Average earnings, including bonuses, rose 4.1% on-year in the three months to March, picking up speed from 3.9% in February and topping consensus of a slowdown to 3.8%.
For regular earnings, pay growth cooled to 3.4% in the three months to March, from 3.6% in the three-month stretch to February. That figure was in line with consensus.
For the private sector alone, total pay growth picked up to 3.9% in three months to March from 3.6% in the period to February. For regular pay in the private sector, it cooled to 3.0% from 3.2%.
Wealth Club analyst Susannah Streeter commented: "Stagflation worries are stalking the UK as the latest data shows the labour market continuing to lose momentum, while conflict in the Middle East has fanned the flames of inflation. The jobs numbers show employers are becoming increasingly cautious about hiring amid a backdrop of sluggish growth, geopolitical uncertainty and increasing cost pressures.
"The rise in unemployment from 4.9% to 5% adds to mounting evidence that cracks are beginning to widen in the labour market. Vacancies are also continuing their steady descent, falling again to 705,000, the lowest level since early 2021. There's another warning sign coming from the employment data, with the early estimate for April showing the number of payrolled employees falling by 210,000 compared with a year earlier, alongside a monthly decline of 100,000. It appears businesses are becoming markedly more defensive as economic uncertainty intensifies."
Against the yen, the buck rose to JPY159.11 from JPY158.84.
Japan's economy grew faster than expected in the first quarter of 2026, Cabinet Office figures showed Tuesday.
According to preliminary estimates, Japan's annualised gross domestic product grew 0.5% quarter-on-quarter, beating expectations of a 0.4% rise, Cabinet Office data showed.
Oxford Economics analysts commented: "Despite a healthy gain in Q1 GDP, we expect the growth to moderate ahead."
In Tokyo, the Nikkei 225 ended down 0.4%. In China, the Shanghai Composite ended up 0.9%. The Hang Seng Index in Hong Kong was 0.6% higher. The S&P/ASX 200 in Sydney shot up 1.2%.
In the US on Monday, performance on Wall Street was mixed with the Dow Jones Industrial Average up 0.3%, while the S&P 500 fell 0.1% and the Nasdaq Composite declined 0.5%.
The yield on the US 10-year Treasury was steady at 4.61% early Tuesday, where it stood at the time of the London equities close on Monday. The 30-year was unchanged at 5.14%.
Gold rose to USD4,547.21 an ounce from USD4,541.71.
In London, IG Group was the best large-cap performer, adding 7.1%. The online trading platform provider said revenue in the first quarter of the year shot up 21% to GBP339.9 million.
In addition, it lifted annual guidance. It now expects organic revenue to grow between 10% and 15%. It previously predicted a rise "towards the top end of our mid-to-high single-digit target range".
Also upping its view, Currys rose 7.4%. It expects higher than forecast annual profit, and the electricals retailer is yet to see a hit from the Middle East conflict.
Currys now expects adjusted pretax profit growth of 18% to GBP191 million for the year ended May 2, ahead of a prior guidance range of GBP180 million to GBP190 million. Annual like-or-like sales were up 4%, it added.
"Recent trading has been very solid; we've not yet seen an impact from the Middle East conflict, and our energy costs are well hedged for the coming year," CEO Alex Baldock said. "This performance, combined with our strong balance sheet, means we are well positioned to navigate any market volatility ahead, tap into exciting growth opportunities and continue returning capital to shareholders."
Elsewhere in London, Forterra lost 6.2%. The maker of clay and concrete building products has been hurt by "challenging" market conditions. Revenue in the four months to April 30 fell 11% on-year like-for-like.
Forterra said: "The ongoing crisis in the Middle East has created further challenges for our business, with additional cost inflation driven by significant increases in the cost of diesel, transport services and natural gas. The impact of the increased cost of gas is however mitigated by our forward purchasing strategy, with around 80% of our requirements for the remainder of the year secured at pre-crisis pricing.
"Whilst our forward purchasing of gas insulated us from the higher prices in March, we have rescheduled some production from April until the second half of the year in order to manage our gas cost. Assuming market conditions allow, we plan to recover this production in the second half of the year, which will increase the second half weighting of our full-year result."
The conflict has not affected demand for its offering, though Forterra is mindful of wider consequences, including loftier borrowing costs.
"With the elevated uncertainty we presently face, forecasting how the second half of the year will evolve has become more challenging, leading to a greater range of potential full year outcomes than previously anticipated," it added.
By Eric Cunha, Alliance News news editor
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