UK shares fall as political uncertainty, Middle East concerns hit sentiment

UK shares slipped on Tuesday as investors weighed domestic political uncertainty, with Prime Minister Keir Starmer defying calls to step down, alongside renewed concerns over tensions in the Middle East.

The blue-chip FTSE 100 index fell 0.4% as of 1053 GMT, while the midcap FTSE 250 dropped 1.2%.

The declines suggest lingering questions over Starmer’s future even after his impassioned plea on Monday, where he urged voters and Labour Party lawmakers to stick with him and avoid a leadership contest he said would only bring chaos.

Also read: Starmer says his govt is a 10-year project despite calls to quit

More than 80 Labour lawmakers have publicly called for Starmer to set a resignation date so the party could install a new leader in an orderly manner. Starmer, however, has vowed to stay at the helm.

“The markets are pretty nervous. People are just all scratching their heads and saying, ‘What is he (Starmer) doing?’” said David Morrison, senior market analyst at Trade Nation.

Investors were also concerned by the lack of progress in resolving the Middle East conflict. U.S. President Donald Trump said the ceasefire with Iran was “on life support.”

Tehran rejected a U.S. proposal to end the conflict and stuck to a list of demands that Trump described as “garbage”.

Bank stocks in the UK fell 2.3%, dragged lower by a 5.2% decline in shares of Metro Bank and a 3.6% drop in Barclays.

Aerospace and defence stocks also slipped 2%, while the rate-sensitive real estate sector fell 1.9%.