FTSE 100 gains as energy stocks rally on Middle East uncertainty

By Tharuniyaa Lakshmi

March 24 (Reuters) - The FTSE 100 closed higher on Tuesday, lifted by energy stocks as investors weighed mixed signals from the Middle East conflict.

The blue-chip FTSE 100 .FTSE rose 0.7%, while the mid-cap FTSE 250 .FTMC fell 0.5%. European markets tracked a rebound on Wall Street, which recovered after a shaky open.

UK energy stocks .FTNMX601010 rose 3.2%, providing the biggest boost as oil prices climbed back above $100 a barrel after Iran denied U.S. President Donald Trump's claim of "productive talks" with Tehran. O/R

"The UK's outsized exposure to the energy sector was good news again today and gave the FTSE 100 fuel to pull ahead of the market pack," said AJ Bell head of markets Dan Coatsworth.

Markets now price in almost three quarter-point Bank of England rate hikes this year, a sharp shift from the cuts expected before the conflict. Some economists say weak growth and a soft labour market could still keep rates on hold.

BoE Chief Economist Huw Pill said uncertainty over the conflict's economic impact should not be an excuse to delay action against inflation.

Miners .FTNMX551030 pared earlier losses, helped by steady gold prices. GOL/

A CBI survey showed British retail sales have tumbled this month by the most since April 2020, when most non-food shops were shut at the onset of the COVID pandemic.

Among individual movers, Bellway BWY.L dropped 17.5% after the home builder cut its profit margin outlook and warned of risks to the housing market from the conflict.

S4 Capital SFOR.L surged 21.3% after the advertising group said it expects its 2026 net revenues to meet analyst forecasts, despite a first-quarter hit from weaker client spending linked to the war.