The FTSE 100 posted modest gains on Friday while the oil price fell amid guarded optimism about a Middle East peace deal.

The FTSE 100 closed up 22.79 points, 0.2%, at 10,466.26.

The FTSE 250 ended up 219.55 points, 1.0%, at 23,167.47, and the Aim All-Share rose 3.59 points, 0.5%, at 800.23.

For the week, the FTSE 100 rose 2.7%, and the FTSE 250 climbed 2.5%, but the Aim All-Share fell 1.5%.

Stocks gained encouragement from lower oil prices as investors weighed the latest developments in the Middle East.

US secretary of state Marco Rubio on Thursday said there were “some good signs” in the negotiations between the US and Iran, but added that he did not want to be “overly optimistic”.

Meanwhile, a senior UAE official said on Friday that the US and Iran have a “50-50” chance of reaching an agreement that would free up the Strait of Hormuz.

Presidential adviser Anwar Gargash urged Tehran not to overplay its hand in the stop-start negotiations during the Middle East war’s fragile ceasefire.

Iranian officials “have missed a lot of chances over the years because there’s a tendency to overestimate their cards”, Gargash told the Globsec Forum in Prague.

“I hope they don’t do that this time.”

Susannah Streeter, chief investment strategist at Wealth Club, said hopes for a resolution to the Middle East crisis continue to “ebb and flow”, but there remains “cautious optimism at the end of the week”.

Brent crude for July delivery traded lower at 104.22 dollars a barrel on Friday, down from 107.98 dollars at the time of the equities close in London on Thursday.

In London, investors also assessed data which showed UK public sector borrowing was higher than expected in April, while retail sales came in shy of the forecast.

The Office for National Statistics said borrowing in April totalled £24.34 billion, rising from £11.48 billion in March and higher than the £19.46 billion recorded a year prior.

The ONS said the April figure was “£3.4 billion more than the £20.9 billion forecast by the Office for Budget Responsibility”.

However, borrowing in the financial year to March was below the OBR forecast.

Borrowing in the financial year ended March was provisionally estimated at £129.0 billion, down 15% on the year and £3.7 billion below the OBR’s £132.7 billion forecast.

Borrowing in the year to March was estimated at 4.2% of gross domestic product, the lowest figure since financial 2020, when it was 2.6%.

The ONS said its forecast for borrowing in the year to March was reduced by £3.0 billion from its last estimate.

Separately, the ONS said retail sales volumes fell 1.3% in April from March.

They had risen 0.6% in March, revised down from an initially reported 0.7% climb.

A lesser decline of 0.6% had been expected for April, according to consensus cited by FXStreet.

The pound traded at 1.3441 dollars on Friday afternoon, up from 1.3401 dollars on Thursday.

Against the euro, sterling firmed to 1.1584 euro from 1.1566 euro on Thursday.

In European equity markets on Friday, the Cac 40 in Paris ended up 0.4%, and the Dax 40 in Frankfurt jumped 1.2%.

In Europe, German business morale unexpectedly increased in May, a survey showed on Friday, raising hopes that Europe’s biggest economy is weathering the Iran war energy shock better than feared.

The Ifo institute’s confidence barometer rose to 84.9 points from 84.5 in April, the first time it has gone up since the start of the Mideast conflict, and confounded analyst expectations for a slight decrease.

In New York, the Dow Jones Industrial Average was up 0.6%, the S&P 500 was 0.2% higher, and the Nasdaq Composite climbed 0.1%.

The yield on the US 10-year Treasury narrowed to 4.58% on Friday from 4.62% on Thursday.

The yield on the US 30-year Treasury ebbed to 5.09% from 5.14%.

The euro traded higher against the greenback, at 1.1603 dollars on Friday against 1.1587 dollars on Thursday.

Against the yen, the dollar was trading at 159.12 yen, lower than 159.17 yen.

On the FTSE 100, Croda rose 4.3% as JPMorgan reiterated an “overweight” rating, while 3i Group climbed 2.7% as chief executive Simon Borrows bought a chunk of shares worth £1.1 million in total.

Cooling bond yields, as expectations for fewer interest rate hikes gained ground, boosted housebuilder Persimmon, up 3.0%, while a positive trading update lifted Games Workshop by 7.9%.

The FTSE 250 saw double-digit moves for Ceres Power, Bodycote and Softcat.

Horsham-based clean energy technology developer Ceres Power shot up 21% as UBS raised its share price target by 70% to 970p from 570p.

Bodycote soared 19% as it became the latest UK-listed company to receive bid interest.

The Macclesfield-based thermal processing firm said it had received an offer price of 885 pence per share in cash from Apollo Management.

Meanwhile, Softcat surged 13% after raising its full-year profit growth expectations and saying it is “encouraged” by business momentum.

Buckinghamshire, England-based Softcat said it continued to perform well in its third quarter ended April 30, with strong double-digit growth on-year in both gross profit and underlying operating profit.

Gold traded at 4,520.92 dollars an ounce on Friday, up from 4,508.26 dollars on Thursday.

The biggest risers on the FTSE 100 were Games Workshop, up 1,510.0p at 20,560.0p, Rightmove, up 29.8p at 440.6p, Croda International, up 123.0p at 2,991.0p, Metlen Energy & Metals, up 1.36p at 38.98p and Rolls Royce, up 40.6p at 1,248.8p.

The biggest fallers on the FTSE 100 were Convatec, down 6.6p at 197.0p, BP, down 14.0p at 551.2p, Experian, down 54.0p at 2,591.0p, Lion Finance, down 200.0p at 10,640.0p and Fresnillo, down 60.0p at 3,236.0p.

Financial markets in the UK and the US are closed on Monday.

Later in the week, the global economic calendar has Australian inflation figures and the US personal consumption expenditures price index.

Next week’s local corporate calendar has first-quarter results from B&Q owner Kingfisher on Tuesday and full-year results from electricity generator SSE on Thursday.

– Contributed by Alliance News