March 31 (Reuters) - British stocks rose on Tuesday after a report said the U.S. was looking to bring the Middle East conflict to an end, but the main indexes were set for their worst monthly showing
UK's main indexes post biggest monthly drop since 2020 as Middle East conflict weighs
Market Performance and Economic Impact
March 31 (Reuters) - British stocks edged higher on Tuesday but logged their worst monthly showing since 2020 as the Middle East conflict drove a surge in oil prices, fuelling worries about inflation and slowing economic growth.
The blue-chip index FTSE 100 rose 0.5% but snapped an eight-month winning streak. The mid-cap FTSE 250 climbed 1.2% on the day, but ended a three-month run of gains.
Key Developments Influencing the Market
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Geopolitical Tensions and Oil Prices
U.S. Defense Secretary Pete Hegseth said on Tuesday the next few days in the war against Iran would be decisive and warned Tehran that the conflict would intensify if it did not make a deal.
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Safe Haven Assets and Precious Metals
Precious metals miners rose 4.2% and provided the biggest boost to the index as gold prices climbed, with investors flocking to the safe haven amid inflation fears and expectations of a hawkish monetary policy response. [GOL/]
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UK Economic Data and Inflation
GDP and Growth Outlook
Official data from the ONS confirmed that Britain's economy barely expanded at the end of 2025, adding to the challenge for the government to keep growth on track this year with the Iran war likely to push up inflation and hit demand.
Shop Price Inflation and Bank of England Response
A BRC survey showed shop price inflation rose in March, putting the Bank of England in focus as it monitors food prices and inflation expectations.
Interest Rate Expectations
Investors are betting on two, or possibly three, quarter-point rate hikes by the Bank of England before the end of this year, a sharp reversal from rate cuts seen by traders before the conflict.
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Corporate Movers
Raspberry Pi's Strong Performance
Raspberry Pi soared 47% after the single-board computer maker posted better-than-expected rise in annual adjusted core earnings.
Unilever's Decline Amid Merger Talks
Unilever dropped 7.2% to its worst day since 2008 after the consumer goods firm said it was in advanced talks to combine its food business with spice maker McCormick in a potential deal that would deliver $15.7 billion in cash and give shareholders majority control of the merged entity.
(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Tasim Zahid and Aurora Ellis)
