LONDON: Britain’s FTSE 100 closed higher on Monday as easing geopolitical tensions in the Middle East boosted global market sentiment, although a sharp decline in oil prices dragged energy stocks lower.

The FTSE 100 index gained 0.4% to close at 10,781.75 points, while the FTSE 250 advanced 0.6%, supported by improved investor confidence after the United States paused military strikes on Iran.

Oil Prices Slide as Tensions Ease

Global markets reacted positively after Washington suspended its military campaign against Iran over the weekend. A senior Iranian official also indicated that Tehran would halt its retaliatory actions as long as the US maintained the ceasefire.

The easing of conflict concerns pushed Brent crude prices down by more than 7%, with oil trading around $89.42 per barrel, reducing fears of supply disruptions in the Middle East.

However, the sharp drop in crude prices weighed heavily on Britain’s energy sector, with the FTSE energy index falling 1.5%, marking its largest single-day decline since the beginning of the month.

Travel and Leisure Stocks Rally

Lower oil prices benefited airline and hospitality companies by improving expectations for fuel costs and consumer spending.

The travel and leisure sector climbed 1.7%, making it one of the day’s strongest-performing industries.

British Airways owner International Airlines Group (IAG) rose 1.5%, while hotel operator Whitbread, the parent company of Premier Inn, gained 1%.

Vodafone Surges After Upgraded Outlook

Corporate earnings also supported market gains.

Shares of Vodafone jumped 4.8% after the telecommunications giant raised its financial outlook to reflect the impact of its Safaricom transaction.

The company said it now expects annual results to reach the upper end of its revised guidance, helping lift the FTSE 350 telecom services index by 3.9%.

AstraZeneca Boosts Pharmaceutical Sector

The pharmaceutical sector also delivered solid gains after AstraZeneca reaffirmed its full-year and long-term financial guidance.

The drugmaker exceeded analysts’ second-quarter profit expectations, sending its shares 1.7% higher and lifting the broader FTSE pharmaceutical index by 1.8%.

Investors Monitor Geopolitical Developments

Market analysts said investor optimism was driven largely by hopes that diplomatic efforts between the United States and Iran could prevent further escalation in the Middle East.

While falling energy prices pressured oil producers, lower fuel costs and strong corporate earnings helped offset losses, allowing UK equity markets to finish the session in positive territory.