(Reuters) - London’s main index sprang to a near seven-month high on Tuesday as oil majors leapt on the back of tighter U.S. sanctions on Iran and exporters benefited from a weaker pound as Brexit jitters returned.
The FTSE 100, whose components earn a large chunk of their revenue from outside the UK, jumped 0.9 percent, with further support from an upbeat Wall Street. The FTSE 250 added 0.3 percent.
Shell rose 2.2 percent to a six-month high and BP gained 2.6 percent as oil prices rose in anticipation of tightened supply after the United States said it would end all Iran sanctions exemptions by May.
On the flip-side, airline stocks were bruised by higher oil prices. Easyjet fell 3.9 percent and British Airways-owner IAG shed 3.3 percent on the main index. Wizz Air lost 2.7 percent on the mid-cap index.
“Suddenly we’re back to supply uncertainty being a graver threat than demand uncertainty. This risks a very real prospect of an abrupt spike in prices if there is not enough supply to fill the gap,” said Markets.com analyst Neil Wilson.
“Risks seem skewed to the upside for oil and we may see a pop higher still.”
Also fuelling the main bourse were export-driven stocks which gained after sterling slumped to a two-month low on fading hopes for a Brexit breakthrough in talks between the ruling and opposition parties and as Prime Minister Theresa May faced growing pressure to quit.
GlaxoSmithKline, AstraZeneca, Diageo all helped boost the main index.
Ireland’s main index, considered a barometer of Brexit sentiment, snapped a six-day winning streak on Tuesday to close down 0.7 percent.
Among a handful of stocks in the red on the FTSE 100 was precious metals miner Fresnillo which slipped 2.4 percent as gold prices fell after the dollar gained and BMO downgraded the stock on Monday.
Shares of BT Group fell 1 percent after Reuters reported that an investigation into an accounting fraud in the company’s Italian unit had uncovered more evidence senior executives had inflated the division’s financial performance.
News-driven moves were scant but small-cap Thomas Cook rose more than 18 percent on its best day in more than four months after Sky News reported the tour operator had been tentatively approached by several parties about taking over its tour operations or the entire company.
Reporting by Yadarisa Shabong and Shashwat Awasthi in Bengaluru; Editing by Larry King and Catherine Evans