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UK Shares Rise as Investors Weigh Middle East Tensions; BP Gains

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London's FTSE 100 rose 0.20% on Tuesday as investors assessed renewed US pressure on Iran alongside corporate earnings updates and fresh UK economic data.

The US threatened to reinstitute a naval blockade of Iranian ports and impose a 20% charge on all cargo shipped through the Strait of Hormuz.

"President Trump has a habit of starting with an extreme negotiating position so no doubt this would come down if it was ever implemented, but the very spectre of tolls will make markets and customers nervous. US Central Command said that it will resume the Iran blockade at 4pm [New York] time today, so that still leaves a bit of time for a possible climbdown," said Deutsche Bank Research.

Across the blue-chip index, oil giant BP (BP.L) was one of the top performers, rising 1.56% after forecasting stronger second-quarter refining margins and a slight increase in its oil trading result from the first quarter.

"BP's trading update was better than what we had modeled across most indicators, with strong realisations in the upstream alongside higher refining margin capture than we had modeled. These divisions were supported also by strong oil trading results," RBC Capital Markets said, with an outperform rating on the stock.

Meanwhile, AstraZeneca (AZN.L) agreed to license Dizal Pharmaceutical's lung cancer treatment candidate Zegfrovy. Under the agreement, AstraZeneca will pay $600 million upfront, with potential milestone payments of up to $900 million and tiered royalties on global sales. The stock was down 1.78% at closing.

On the macro front, UK retail sales rose 1.7% year over year on a like-for-like basis in June, slowing from May's 3.4% increase, according to the British Retail Consortium. The reading missed expectations for a 2.6% gain

"June's record-breaking heat, food price inflation easing slightly and the start of the World Cup gave retailers a welcome boost, encouraging more frequent top-up shops. With both the warm weather and football tournament continuing this month, consumer confidence could receive a further uplift. However, looking further ahead, ongoing political uncertainty and the impact of the Middle East conflict starting to filter through to food prices, may weigh on confidence once again," said Institute of Grocery Distribution Chief Executive Officer Sarah Bradbury.

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