The FTSE 100 gave up earlier gains to close down 0.29% at 10,751.59 on Tuesday 10 November, even as oil prices kept falling on hopes that the conflict with Iran could be coming to an end. At the same time, the pan-European STOXX 600 index closed 0.3% higher at 658.32, ending the day within touching distance of its record high.

London and continental Europe moved in opposite directions at the close. The more domestically focused FTSE 250 rose 0.16% to 24,746.65, while Germany's DAX added 0.3% to 26,347.45 and France's CAC 40 rose 0.6% to 8,278.59, according to Sharecast.

London gives up gains as oil shares slide

The FTSE 100 spent most of the session ahead before slipping into negative territory at the close. Brent crude shed 0.9% to $91.74 a barrel and West Texas Intermediate fell 0.29% to $86.60, Sharecast reported, and the fall in crude dragged the heavyweight oil majors lower. Shell fell 2.07% to 3,624.50p, BP also dropped, and miners were on the back foot.

Marks & Spencer was the standout riser, up 4.07% to 455.40p after the high street group pledged to double its dividend and repeated plans to grow food and clothing sales. Vodafone dipped even though the telecoms group raised full-year guidance despite sliding into the red and continued weakness in Germany. It now expects adjusted EBITDAaL of €13.2bn to €13.4bn and adjusted free cash flow of €2.8bn to €3bn.

European shares close in on a record

European stocks surged in the first half of the session and the STOXX 600 rose as high as 662.54 in morning trade, putting it within about 1% of its record close of 660.52 set on 11 August. Banks led the sectoral gains, up 1.7%, and Spain's lender-heavy benchmark outperformed regional markets with a gain of 0.98%.

Chip stocks powered the advance. Germany's Infineon rose after posting a surge in fourth-quarter earnings and forecasting further growth as it benefits from the rapid build-out of data centres. Revenues jumped 19% in the three months to the end of September, its segment result rose 56%, annual revenues came in at €16.4bn, up 12% on the previous year, and operating profit soared to €2.2bn from €1.5bn. Henkel also rose after lifting its full-year sales outlook, and now expects organic sales growth of 3% to 4% for 2026.

Hot US inflation cools the rally

Stocks came off their highs after US inflation data came in hotter than expected. The US Bureau of Labor Statistics reported that the consumer price index rose 0.4% month on month in October, above the 0.3% economists had pencilled in. Food prices rose 0.5% and energy prices rose 0.7% on the month, while core inflation, which strips out food and energy, rose 0.3%.

Kathleen Brooks, research director at XTB, said the hot reading had increased the chance of a rate rise from the Federal Reserve in December, with an 86% chance of a 25 basis point increase and a 13% chance of a 50 basis point move. The US 10-year Treasury yield rose towards 5.00% as traders priced in further rises, with Fed governor Christopher Waller also backing a December increase.

Sentiment had been lifted earlier by Donald Trump saying overnight that the war with Iran was “effectively over” and that further military action did not seem necessary at this point. Russ Mould, investment director at AJ Bell, said markets increasingly took the view that Trump needed to find a way to end the Iran war, which in theory would help bring down energy costs and bring relief to consumers and businesses.

UK shoppers hold back before Christmas

On home shores, figures from the British Retail Consortium and KPMG showed retail sales growth remained sluggish in October as consumers held back spending ahead of Black Friday and Christmas. Total retail sales increased by 1.5% year on year over the four weeks to 31 October, slightly below the 1.6% growth recorded in the same period last year but ahead of the three-month average of 1.2%.

Separate data from Worldpanel by Numerator showed grocery price inflation continued to edge upwards, reaching 2.6% in the four weeks to 1 November, up from 2.5% in September and 2.3% a month before that. Worldpanel said household budgets had already taken a hit from the latest energy price cap rise as cold weather arrived in October.

What to watch next

Traders will now watch for further signals on US interest rates and the path of oil prices, with OPEC's monthly report due on Wednesday and the International Energy Agency's oil market report due on Friday. For London, the question is whether the FTSE 100 can recover once the drag from oil shares eases, and whether Europe can turn its near-record run into a fresh closing high.