The FTSE 100 made modest progress on Thursday after Donald Trump walked back on threats to impose tariffs, but underperformed European peers amid soft mining, energy and defence stocks.

The FTSE 100 index closed up 11.96 points, 0.1%, at 10,150.05.

The FTSE 250 ended 299.64 points higher, 1.3%, at 23,370.93, and the AIM All-Share closed up 9.08 points, 1.1%, at 817.67.

US President Trump said late on Wednesday that he had reached a framework for a deal over Greenland following a meeting with Nato chief Mark Rutte and would waive tariffs scheduled to hit European allies.

“We have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic region,” Mr Trump said in a post on Truth Social.

The US president did not provide any details on the framework, but added that his threatened tariffs against European countries who were resisting his quest to acquire Greenland were now off the table.

Kathleen Brooks, research director at XTB, said: “The tariff risk is now on the back burner, and this week’s price action tells us that financial markets fear tariffs more than geopolitical risks.”

Ms Brooks said there is still a way to go before markets reverse overall losses for this week, but noted the selloff in recent days “sent a jolt of volatility through financial markets, but it did not lead to a rout”.

This suggests that investors remain “dip buyers” and that the fundamentals for markets “remain strong”.

In European equities on Thursday, the CAC 40 in Paris closed up 1.0%, while the DAX 40 in Frankfurt ended 1.2% higher.

In New York, financial markets were higher at the time of the London equity market close.

The Dow Jones Industrial Average was up 0.9%, the S&P 500 was 0.7% higher, while the Nasdaq Composite climbed 1.0%.

The yield on the US 10-year Treasury was quoted at 4.27%, unchanged from Wednesday. The yield on the US 30-year Treasury was quoted at 4.87%, narrowed from 4.89%.

Data showed US third-quarter economic growth was slightly stronger than expected, according to numbers from the Bureau of Economic Analysis (BEA).

US gross domestic product expanded by 4.4% on an annualised basis, quarter-on-quarter, in the three months to September 30. The prior BEA estimate said growth was 4.3%.

“The increase in real GDP in the third quarter reflected increases in consumer spending, exports, government spending, and investment. Imports, which are a subtraction in the calculation of GDP, decreased,” the BEA said.

The pound was quoted higher at 1.3498 US dollars at the time of the London equities close on Thursday, compared to 1.3437 dollars on Wednesday.

The euro stood at 1.1749 dollars, higher against 1.1707 dollars. Against Japan’s yen, the dollar was trading at 158.27 yen, higher from 158.18 yen.

In London, figures showed UK public sector net borrowing rose in December by less than expected.

According to the Office for National Statistics, net borrowing was £11.58 billion in December, below the FXStreet-cited market consensus estimate of £13.5 billion.

The December total was above November’s net borrowing of £10.94 billion, which was revised downwards from £11.65 billion. But it was down 38% from December 2024.

Danni Hewson, AJ Bell head of financial analysis, said: “The significant fall in government borrowing in December will be a relief for the Treasury, especially since January’s numbers are likely to look even better with a surge in self-assessment receipts expected.”

Ms Hewson pointed out spending “nudged up” compared with the previous year, primarily because of increases to benefit payments and pay rises, but that was more than offset by an increase in the cash coming into the government’s coffers.

However, she noted the picture “isn’t quite as rosy” for the full financial year to date “with total borrowing to the end of December at levels only seen twice before”.

“The deficit is reducing, but the pace of the reduction is glacially slow. With further increases to benefit payments on the way in April, the pressure on the public purse is still uncomfortable,” Ms Hewson added.

On the FTSE 100, defence stocks BAE Systems and Babcock International gave up 3.7% and 1.4% on the cooler geopolitical temperature.

Miners were another weak feature after recent gains. Antofagasta fell 2.2%, Glencore dropped 2.0% and Anglo America eased 1.7%.

Insurer Admiral fell a further 4.6% as RBC Capital Markets downgraded to “sector perform” from “outperform”, the day after Goldman Sachs lowered the stock.

While the weaker oil price weighed on BP, down 1.9% and Shell, down 2.2%.

Brent oil traded lower at 64.26 US dollars a barrel on Thursday, down from 64.82 dollars late on Wednesday.

On the FTSE 250, Computacenter led the way, up 10%, after better than expected trading in 2025.

The services provider, based in Hatfield, Hertfordshire, said business performance in the fourth quarter, and 2025 as a whole, was ahead of its expectations.

As a result, the FTSE 250-listing expects full-year adjusted pre-tax profit to be no less than £270 million, “comfortably ahead” of market expectations which the firm put at £253.6 million. It would represent growth of as much 6.3% from £254 million reported in 2024.

“This is a strong pre-announcement, with results ahead of expectations, earnings upgrades to come and encouraging messaging on the pipeline and outlook,” analysts at JPMorgan said.

Senior rose 8.8% as it said it expects full year adjusted pre-tax profit to be “comfortably above previous expectations”, boosting guidance for the second time in three months.

The company, based in Royston, Hertfordshire, makes components and systems for aerospace and defence, land vehicle, and power and energy customers.

It said trading since the November update has been “stronger than expected trading, notably in Aerospace”.

On AIM, Kitwave soared 33% as it accepted a £251 million takeover offer from New York investment company OEP Capital Advisers.

The cash bid values each share in the food wholesaler, based in North Shields, North Tyneside, at 295 pence.

Gold was quoted at 4,874.80 US dollars an ounce on Thursday, after hitting another record high, up from 4,833.66 dollars on Wednesday.

The biggest risers on the FTSE 100 were: St James’s Place, up 62.5 pence at 1,511.0p; Hikma Pharmaceuticals, up 48.0p at 1,568.0p; JD Sports Fashion, up 2.56p at 84.62p; Spirax, up 220.0p at 7,370.0p; and ConvaTec, up 7.0p at 236.6p.

The biggest fallers on the FTSE 100 were: Admiral Group, down 136.0p at 2,812.0p; BAE Systems, down 77.0p at 1,985.0p; ICG, down 52.0p at 1,940.0p; Rio Tinto, down 155.0p at 6,486.0p; and Shell, down 59.5p at 2,674.0p.

Friday’s global economic calendar has a raft of flash composite PMI readings, an interest rate call in Japan overnight, plus UK consumer confidence and retail sales data.

Friday’s UK corporate calendar has a trading statement from currency and asset manager Record.

Contributed by Alliance News