Source: Sharecast
At 0845 BST, the FTSE 100 was down 0.6% at 8,822.87.
Neil Wilson, UK investor strategist at Saxo Markets, said: "After rallying on Monday on hopes that the Israel and Iran conflict would remain contained, stock markets have lurched lower again on Tuesday after US President Trump left early from the G-7 summit in Banff and told Iran to evacuate Tehran, signalling potential escalation of the conflict. Trump said he left the summit early due to something ‘much bigger’ than discussing a ceasefire.
"Israel and Iran meanwhile traded strikes for a fifth day. Reports have indicated that Tehran is willing to negotiate, but it takes two to tango and Israel won’t stop until it feels like it’s done enough. Diplomatic sources in Iran have reportedly pushed for a cease-fire, but Israeli PM Netanyahu said on Monday his country was ‘not backing down’ from eliminating Iran’s nuclear programme. Palantir - which has skin in the game in terms of the global defence outlook - hit a record high."
He added: "UK investors are awaiting inflation data, the Bank of England’s policy update, and retail sales - all due this week. Today the focus for the market will be the US retail sales report."
Investors were also digesting news that UK Prime Minister Keir Starmer and Trump signed off a trade deal at the G7 summit in Canada on Monday.
In equity markets, oil majors BP and Shell were on the rise again as oil prices rallied, but BA and Iberia owner IAG, Wizz Air and easyJet all flew lower amid the prospect of higher fuel costs.
Ashtead lost ground as the equipment rental firm reported a drop in full-year adjusted pre-tax profit.
On the upside, construction services group Morgan Sindall surged after it said that full-year results for 2025 will be "significantly ahead" of previous expectations due to a stronger-than-forecast performance from the Fit Out division in the second quarter.