London's FTSE 100 closed firmly higher on Monday 9 November as a sharp fall in oil prices eased worries about inflation, while rising gold prices lifted the shares of precious metal miners.

The blue-chip index finished the session up 1.02% at 10,782.87, and the mid-cap FTSE 250 added 0.82% to 24,706.34. The gains followed a choppy few days for London shares, with sentiment reviving as energy costs fell.

Oil slide drives the rally

Benchmark Brent crude fell 4% to $94.14 a barrel, and West Texas Intermediate was trading 3% lower at $87.80, after US President Donald Trump said new attacks on Iran were unlikely while talks to end the conflict progress. Lower oil prices ease the pressure on household and business costs, and traders read the drop as good news for the outlook on inflation.

Energy shares were the main casualty of the oil slide, but the wider market more than made up for it. By mid-morning the FTSE 100 was already 0.6% higher at 10,746.09, and it pushed on through the afternoon to close near the day's best levels.

Miners lead as gold climbs

Precious metal miners were the session's strongest sector, rising 3.4% as gold prices gained 0.7%. Endeavour Mining, Antofagasta and Anglo American were among the benchmark index's top gainers, with investors turning to gold as a haven while they awaited US inflation data due later this week that could shape expectations for the Federal Reserve's rate path.

Investors were also assessing the UK's latest jobs report, which landed on Monday, for what it says about the health of the labour market and the path of interest rates.

Bank of England raised rates last week

The rally came days after the Bank of England raised interest rates by a quarter-point to 4% last week. Its policymakers warned that at least one more increase was likely if the US-Iran conflict continued, a reminder that the same tensions which pushed oil prices down on Monday remain a live risk for inflation.

What to watch next

Attention now turns to the US inflation figures due later this week, which traders will read for clues about the Federal Reserve's next move on interest rates. Any sign that price pressures are cooling would support shares further, while a hot reading could quickly reverse Monday's gains. Oil traders, meanwhile, will watch whether the talks over Iran hold, since any setback could send Brent back above $94 a barrel just as fast as it fell.

For now, though, the market's message was clear: cheaper oil and dearer gold were a welcome combination for London shares, and the FTSE 100 starts Tuesday 10 November within sight of its recent highs.