LONDON — Britain's benchmark FTSE 100 index edged lower early Thursday, closing at 10,593.61 after shedding 15.27 points, or 0.14 percent, as initial euphoria over a US-Iran ceasefire gave way to caution amid signs the truce remains fragile and oil prices began rebounding.

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The modest retreat came after a strong 2.51 percent surge the previous day to 10,608.88, when news of the two-week ceasefire agreement and the prospect of reopened shipping lanes through the Strait of Hormuz sent global stocks higher and crude prices plunging as much as 15-17 percent. Thursday's session saw some profit-taking and reassessment as traders monitored developments in the Middle East.

The index traded in a range between a high of 10,643.61 and a low of 10,578.45, with the previous close at 10,608.88. Volume was steady as the market digested mixed global signals and domestic factors, including the Bank of England's steady interest rates and ongoing commodity price volatility. The FTSE 100 has recovered significantly from recent lows tied to conflict fears but remains sensitive to geopolitical headlines.

Geopolitical Caution Weighs on Sentiment

The dominant theme was the evolving situation in the Middle East. President Donald Trump's announcement of a conditional ceasefire between the United States, Israel and Iran initially triggered a sharp relief rally, with oil prices tumbling as fears of prolonged disruption to global energy supplies eased. However, reports that the agreement is fragile and that oil flows through the critical Strait of Hormuz — which handles about one-fifth of the world's oil — faced continued uncertainty prompted a modest rebound in crude benchmarks.

Brent crude rose around 2-3 percent in early Asian and European trade to near $97 per barrel, while West Texas Intermediate climbed similarly. This reversal weighed on sentiment for risk assets and particularly hit energy-heavy components of the FTSE 100.

Analysts described the move as a classic "buy the rumor, sell the news" dynamic with added caution. "The ceasefire removes an immediate tail risk, but investors are now focusing on whether it holds and what it means for longer-term oil supply and inflation," said one London-based strategist. A durable de-escalation would support broader economic growth, but any renewed tensions could push energy costs higher and complicate central bank policies.

The pound sterling held relatively steady against the dollar, reflecting balanced risk appetite.

Sector Performance Shows Divergence

Energy stocks, which had lagged sharply on Wednesday's oil plunge, saw some stabilization but still faced pressure from the partial recovery in crude. BP and Shell, major FTSE 100 constituents, traded mixed after significant declines the prior session.

Financial stocks provided some support, with banks like HSBC, Lloyds Banking Group, Barclays and NatWest showing resilience amid expectations of a more stable global backdrop. However, certain financial names faced selective selling.

Mining and resource stocks were mixed. Precious metals miners such as Fresnillo came under pressure, while some base metal and industrial commodity names held steadier on longer-term demand views. Gold-related shares retained appeal as a hedge amid lingering uncertainty.

Defensive sectors including consumer staples, healthcare and utilities offered stability, with names like Unilever, AstraZeneca and National Grid trading near flat or slightly higher. Travel and consumer discretionary stocks showed selective gains or losses depending on company-specific news.

Notable movers included weakness in some mining and financial names, while broader market breadth remained cautious.

Domestic Backdrop: Steady Rates and Inflation Risks

The Bank of England has held its key interest rate at 3.75 percent in recent decisions, including March, as policymakers assess the impact of Middle East conflict on inflation. Higher energy and commodity prices have pushed up household costs and business expenses, complicating the path back to the 2 percent target.

Markets expect the BoE to hold rates again at its next meeting on April 30, with limited expectations for near-term cuts given elevated inflation risks. Headline inflation had been trending lower before the conflict but now faces upside pressure from energy costs.

Despite these headwinds, the UK economy has shown resilience in parts, supported by strong corporate earnings in sectors like banking and selective commodity strength. The FTSE 100's composition — heavy in financials, energy, mining and healthcare — gives it a defensive tilt that has helped it weather volatility better than some growth-oriented indices.

Global Markets Provide Mixed Cues

Wall Street closed strongly higher on Wednesday, with the S&P 500 up more than 2 percent and the Dow Jones Industrial Average advancing solidly on the ceasefire news. Asian markets showed varied performance early Thursday, with some caution filtering through as oil rebounded.

European peers mirrored the FTSE's tentative tone, with the broader Stoxx 600 and major bourses like Germany's DAX and France's CAC 40 trading slightly lower in early sessions amid reassessment of the truce.

The FTSE 100 has staged an impressive recovery in recent weeks, rebounding from sub-10,000 levels hit during peak conflict fears. Thursday's small pullback leaves the index up solidly year-to-date but still below its February record highs near 10,935.

What Lies Ahead

Attention now turns to any further updates on the ceasefire, US economic data releases and corporate earnings flow. A sustained easing in oil prices would alleviate inflation pressures globally, benefiting consumer spending and rate-sensitive sectors. Conversely, renewed oil strength could keep central banks cautious.

In the UK, investors will watch for fresh economic indicators and the BoE's April 30 decision. Dividend-paying blue-chip stocks in defensive sectors may continue to attract interest if volatility persists.

For market participants, the current environment calls for selectivity. High-quality companies with strong balance sheets, robust cash flows and exposure to resilient sectors stand out, while those heavily tied to volatile commodities or discretionary spending face greater scrutiny.

The FTSE 100's early close at 10,593.61 highlights ongoing resilience amid external shocks. Supportive corporate fundamentals and a somewhat stabilizing global risk tone provide a base for cautious optimism as markets monitor developments in the Middle East.

As trading continued in London, all eyes remained on whether the US-Iran ceasefire can deliver lasting stability or if fragile diplomacy will keep energy markets — and equities — on edge. In a year shaped by geopolitical volatility, the FTSE 100 continues to reflect its dual nature: exposed to global events yet anchored by heavyweight multinational companies with international reach.