London Stocks Plummet Amid OPEC Price Surge, Inflation Worries

The London stock market ended Tuesday down 0.3% as rising oil prices stoked fears about inflation. The FTSE 100 closed at 10,789.28 following losses across Europe, Asia, and the US since last week's end.

Russ Mould, investment director at AJ Bell, said a 'post-UK Bank Holiday hangover' was inevitable for the FTSE given these losses. Government bond yields surged as oil prices rose above $90 per barrel, bringing concerns about inflationary pressures back to the fore.

The US and Iran exchanged fresh strikes over the weekend, with oil prices up 2.4% at $92.68 a barrel and West Texas Intermediate up 3.1% at $88.43. This increased geopolitical ructions are feeding into higher costs for UK households, with shop price inflation hitting a two-year high.

The S&P Global manufacturing purchasing managers' index declined to 51.7 from 51.9 in July but remained above the 50 mark that separates contraction from expansion. Employment rose for the fifth consecutive month and at the quickest pace for two years, while business optimism rose to a six-month high.