FTSE 100 rallies amid reports that Iran-US peace talks could resume

Stock prices in London rallied into the close after a report that peace talks could resume between the US and Iran. The news, which broke as the London market was closing for the week, added to a generally brighter mood after positive domestic economic data. The FTSE 100 index closed up 97.06 points, 0.9%, at 10,736.23. The FTSE 250 ended up 174.16 points, 0.7%, at 23,801.49, and the AIM all-share closed up 4.22 points, 0.6%, at 772.98. For the week, the FTSE 100 rose 1.3%, the FTSE 250 climbed 0.8%, and the AIM all-share advanced 1.6%. In London, investors were cheered by stronger-than-forecast retail sales figures, a pick-up in private sector activity and an improvement in consumer confidence. According to a purchasing managers’ index reading, the UK private sector returned to growth at the start of the third quarter, amid a slight rise in new work. The S&P Global flash composite purchasing managers’ index (PMI) rose to 52.1 points in July from 49.3 in June, a three-month high, beating FXStreet-cited market consensus of 49.7 points. The composite PMI is made up of the services and manufacturing PMIs. The services PMI also returned to growth territory and similarly hit a three-month high, rising to 51.8 points in July from June’s final tally of 48.8. Separate figures from the Office for National Statistics showed UK retail sales were stronger than expected last month, with annual growth spiking to the loftiest level since January. UK retail sales volumes surged 4.2% year-on-year in June, picking up speed from 3.5% in May. The June figure topped the FXStreet-cited consensus, which had pencilled in a slowdown in annual retail sales growth to 2.3%. It was the chunkiest annual surge since a 4.6% rise in January. Completing the good news, the GfK UK consumer confidence index rose to minus 17 points in July from minus 23 points in June, again ahead of consensus. Neil Bellamy, consumer insights director at GfK, said: “Hot on the heels of the summer heatwaves, July has delivered a wave of optimism…The lion’s share of the improvement is in the economy, with a 10-point advance in how consumers view the past year and an eight-point gain for the next 12 months. Allan Monks, at JPMorgan, said the pick-up in consumer confidence was likely influenced by a number of temporary factors, including hot weather, the World Cup and political changes, adding that these effects are likely to fade. Nonetheless, Mr Monks said the overall message of the data releases is one of “growth resilience”. The figures come ahead of next week’s Bank of England interest rate call.