Market Shifts Amid Tensions and Trade Talks

British equities dipped as tensions between Iran and Israel persisted, spurring investors towards safe assets. The FTSE 100 and midcap index reflected this sentiment. Meanwhile, trade discussions at the G7 summit resulted in new aerospace agreements. Economic focus shifts to central bank meetings and Trump's impending tariff deadlines.

British equities experienced a downturn on Tuesday as the intensifying discord between Iran and Israel cast a shadow over market sentiment, driving investors towards safer assets.

The FTSE 100 index slipped 0.4% by 0900 GMT, coming off near-record highs seen on Monday, while the midcap index held steady. The geopolitical conflict, now in its fifth day, closely tied in with trade developments as U.S. President Donald Trump concluded a trade agreement with British Prime Minister Keir Starmer at the G7 summit in Canada.

The trade deal lifted aerospace tariffs but left issues concerning steel and aluminium unresolved. Elsewhere, rising oil prices in response to Middle East tensions buoyed the Oil, Gas and Coal index by 1.5%, with BP and Shell emerging as leading blue-chip gainers. As the central banks prepare for pivotal meetings, investors remain vigilant over potential rate adjustments and trade announcements as Trump's tariff deadline looms.

(With inputs from agencies.)