London stocks closed sharply lower on Thursday as escalating Middle East conflict rattled global markets and pushed oil prices above $100 a barrel for the first time since May.
The FTSE 100 index closed down 77.80 points, or 0.7%, at 10,639.17, while the FTSE 250 fell 299.30 points, or 1.3%, to close at 23,627.33.
The AIM all-share index also declined, ending the session down 6.32 points, or 0.8%, at 768.76.
Yemen’s Iran-backed Houthi rebels struck oil tankers in the Red Sea, triggering the sharp rise in Brent crude, which climbed to 100.98 dollars a barrel from 93.74 dollars late Wednesday.
US President Donald Trump issued a stark warning, threatening “major military punishment” against both Iran and the Houthis should further attacks on shipping occur.
“The US will hold Iran responsible, in that the Houthis are a Surrogate and/or Proxy of Iran, and major military punishment will be inflicted upon Iran and, of course, the Houthis themselves,” Mr Trump wrote on his Truth Social network.
European markets also fell heavily, with the CAC 40 in Paris and the DAX 40 in Frankfurt both closing 1.6% lower on the day.
The European Central Bank held interest rates unchanged as expected, but ECB president Christine Lagarde struck a hawkish tone during her press conference, raising the possibility of a rate hike as soon as September.
The governing council left the deposit facility rate at 2.25%, the main refinancing operations rate at 2.40%, and the marginal lending facility rate at 2.65%.
While policymakers stressed they are “not pre-committing to a particular rate path”, the surge in energy prices following renewed Middle East conflict has sharply lowered the bar for further tightening since June.
US markets also declined, with the Dow Jones Industrial Average down 1.3%, the S&P 500 falling 1.6%, and the Nasdaq Composite losing 2.7%.
US jobless claims unexpectedly fell to 187,000 in the week ending July 18, down 22,000 from the previous week’s revised figure of 209,000, well below the consensus estimate of 212,000.
In London, oil majors bucked the broader trend, with BP rising 3.1% and Shell gaining 1.6% as Brent crude prices continued climbing throughout the session.
Segro led the FTSE 100 risers, jumping 6.5% after the warehouse property investor said it is prepared to recommend Prologis’s “best and final” takeover proposal valuing the company at approximately £14 billion.
The proposal comprises 0.0920 new Prologis shares for each Segro share alongside a partial cash alternative of up to £3.5 billion, representing 25% of the total consideration.
Centrica was the session’s biggest faller on the FTSE 100, sinking 10% after reporting lower operating profit and revenue in the first half of 2026, despite swinging to a pre-tax profit of £672 million from a £43 million loss a year earlier.
The energy supplier, which owns British Gas, now expects its Retail division to finish towards the lower end of its £500 million to £800 million adjusted Ebitda guidance range for the full year.
On the FTSE 250, CVS Group fell 6% despite reporting revenue growth of 5.9% to £712.8 million for the financial year ended June 30, as the Norfolk-based veterinary services provider flagged challenging UK consumer conditions.
CVS said the “economic backdrop in the UK remains challenging with low consumer confidence impacting footfall in companion animal practices,” though it remains confident in its medium to long-term growth prospects.
Mitchells & Butlers ended 5.1% lower after the Birmingham-based pub and restaurant operator reported flat like-for-like sales in the third quarter to July 18, blaming extreme heat and the timing of Easter for the shortfall.
On the AIM market, Mission Group surged 24% after the Devon-based digital marketing agency group said headline operating profit before adjustments is expected to rise 10% to £2.4 million in the first half of 2026.
Markets will be watching Friday’s flash composite PMI readings for the UK and UK retail sales data, alongside trading statements from Taylor Maritime and DiscoverIE Group.