London Stocks Fall as Global Bond Selloff and Middle East Tensions Weigh on FTSE 100

British equities declined on Tuesday, September 1, 2026, as London traders returned from the Summer Bank Holiday to a global bond market selloff, renewed U.S.-Iran military exchanges, and higher oil prices, as reported by Reuters and market data providers. The FTSE 100 fell about 0.9% to levels near 10,723–10,732, its lowest in roughly two weeks, tracking broader European weakness while energy majors found some support from surging crude.

FTSE 100 Drops Up to 1% as Banks and Miners Fall; BP, Shell and Reckitt Rise

The FTSE 100 opened lower and traded down as much as 1% to around 10,725–10,732 by mid-session, according to Reuters and Investing.com data, after closing at 10,824.26 on the previous session (August 28). The more domestically focused FTSE 250 fell more sharply, down about 1.9% at one point and on track for its biggest one-day drop since March.

Energy stocks provided a partial offset: BP rose around 3.4% and Shell about 1.4–1.9% as Brent crude climbed above $91–$92 a barrel. Reckitt Benckiser gained 4–5% after a U.S. jury ruled in favour of its Mead Johnson unit in a baby-formula litigation case. Bunzl advanced after reporting higher first-half results (revenue up 3% to £5.93 billion, statutory pretax profit up 16% to £290.4 million), upgrading its outlook and announcing a new £500 million share buyback.

Rate-sensitive sectors and miners led the declines. Banks such as Barclays fell more than 3%, while precious-metal miners dropped sharply (some 5–8%). Housebuilders and consumer names also came under pressure. UK 10-year gilt yields reached their highest level since 2008, while Japan’s 10-year yield approached generational highs near 3%.

Bond Yield Surge and Middle East Strikes Drive Risk-Off Mood in London

A sharp global rise in bond yields reduced the relative appeal of equities after Federal Reserve Chair Kevin Warsh’s hawkish comments at Jackson Hole. Higher oil prices, driven by U.S. strikes on Iranian targets in the Strait of Hormuz and Iranian retaliation against U.S. bases, stoked fresh inflation concerns and expectations of tighter monetary policy. Markets priced in greater likelihood of Bank of England rate increases by year-end. The combination of geopolitical risk, cost-push inflation fears and the bond rout outweighed the supportive effect of higher crude on energy majors.

FTSE 100 Faces First Post-Holiday Session Amid Rising Yields and Sticky Inflation

UK markets were closed on Monday for the bank holiday, so Tuesday was the first session reacting to the weekend’s U.S.-Iran exchanges and the intensifying global fixed-income selloff. The FTSE 100 remains heavily influenced by international energy, mining and financial stocks. Domestic inflation data (shop-price inflation at a two-year high) and rising gilt yields added to pressure on rate-sensitive UK-focused names. The 52-week range for the FTSE 100 has been approximately 9,107–10,989.

Focus Turns to Oil, Yields and BoE Outlook After London Selloff

Investors will monitor further developments in the Middle East, oil-price trajectory and the path of global bond yields. Upcoming UK economic data, Bank of England expectations and corporate results will also shape near-term direction. Energy names may continue to benefit if crude stays elevated, while rate-sensitive and domestic sectors remain vulnerable if yields keep rising.