FTSE 100 slips amid simmering Middle East worries

London's main index began the first full trading week of the new decade in the red, as escalating tensions in the Middle East sapped demand for risky assets. The FTSE 100 dropped 0.5% in early deals after U.S. President Donald Trump threatened sanctions on Iraq and retaliation on Iran if they responded with force to a U.S. airstrike last week. The FTSE 250 shed 0.4%.

Shares of airlines fell as higher oil prices raised worries of a hit to their margins, with British Airways owner IAG and EasyJet shedding about 2.5% each. However, oil majors Shell and BP outperformed. Morrisons and Sainsbury's fell 3% and 1.5%, respectively. A Times report said British supermarkets will report "underwhelming" Christmas sales, while major competitor Aldi UK separately reported higher sales.