London's FTSE 100 dropped 1.41% on Tuesday's close as oil prices trended down with Iran and Israel's renewed efforts towards restoring peace.
US President Donald Trump told reporters that Washington was "very close to having a good strong powerful deal" and that they "could have an idea on Iran in one or two days now," Deutsche Bank Research noted. Israel and Iran agreed to halt direct military strikes on each other the night before.
In corporate news, drugmaker GSK (GSK.L) fell 0.50% after agreeing to acquire US-based oncology-focused biopharmaceutical company Nuvalent for $10.6 billion. "The acquisition provides GSK with immediate new sales growth opportunities, improving profit contributions from 2027, and a platform in lung cancer for rapid expansion with Ris-Rez, our B7-H3 targeted ADC in phase III clinical development," GSK Chief Executive Luke Miels said.
Information analytics group Relx (REL.L) launched a share buyback program of up to 200 million pounds sterling. The new program will run until June 26, and shares acquired under the scheme will be held in treasury. The stock was flat at close.
On the economic front, the UK's retail sales rose 3.4% year over year on a like-for-like basis in May, following a 3.4% decline in April, according to data from the British Retail Consortium. The reading, which surpassed the expected 0.6% increase for the month, marks the strongest retail sales growth since April 2025 due to demand for outdoor and summer goods amid a heatwave.
"While the sunshine gave retail a welcome lift, this momentum should not be taken for granted. Household finances remain under pressure, consumer confidence is still fragile, and many retailers continue to face rising costs. If Government wants to keep inflation in check and support growth, it must urgently tackle the taxes and levies that are driving up energy bills. Without action, cost pressures will build further, limiting retailers' ability to invest and pushing prices up for customers," BRC Chief Executive Helen Dickinson said.
Meanwhile, the UK launched a long-term artificial intelligence hardware strategy aimed at supporting domestic chipmakers and expanding national computing infrastructure. A 400 million-pound-sterling fund will support the initiative, as the UK seeks to equip its next national AI supercomputer with next-generation chips, UK Chancellor Rachel Reeves said at an AI Adoption Summit. Reeves also confirmed that the British government plans to launch a formal tender process for the new national supercomputer in Edinburgh.