The FTSE 100 ended a losing week on the back foot as investors weighed UK local election results and fresh clashes between the US and Iran in the Middle East.

AJ Bell investment director Russ Mould said: “While officially the ceasefire between the US and Iran remains in place, an exchange of fire in the Strait of Hormuz has helped to extinguish some of the hope that a deal between the parties might be close.”

The FTSE 100 closed down 43.88 points, 0.4%, at 10,233.07. The FTSE 250 ended down 33.34 points, 0.2%, at 22,849.38, and the AIM All-Share fell 3.89 points, 0.5%, at 814.43.

For the week, the FTSE 100 fell 1.4%, the FTSE 250 rose 1.7% and the AIM All-Share advanced 2.0%.

Iranian media reported fresh “sporadic clashes” with US naval forces in the Strait of Hormuz on Friday, following a flare-up the night before, despite the ceasefire in the Gulf.

“For the last hour, sporadic clashes have taken place between the Iranian armed forces and American vessels in the Strait of Hormuz,” the Fars news agency said.

For its part, the US said its forces fired on and disabled two Iranian-flagged tankers that attempted to violate the blockade of Iran’s ports.

Nonetheless, secretary of state Marco Rubio said Washington was expecting a response from Iran on Friday to US proposals for a deal to end the conflict.

“We’re expecting a response from them today at some point… I hope it’s a serious offer, I really do,” Mr Rubio told reporters during a visit to Rome.

Brent crude for July delivery was trading at 101.49 dollars a barrel on Friday, up compared to 97.76 at the time of the equities close in London on Thursday.

The more downbeat mood in equities was reflected in Europe on Friday, where the Cac 40 in Paris ended down 1.1%, and the Dax 40 in Frankfurt ebbed 1.3%.

But US markets advanced once more after mixed economic data, with recent strong earnings continuing to underpin advances.

The Dow Jones Industrial Average was up 0.1%, the S&P 500 rose 0.7% while the Nasdaq Composite was up 1.3%.

The yield on the US 10-year Treasury widened to 4.37% on Friday from 4.36% on Thursday. The yield on the US 30-year Treasury narrowed to 4.94% on Friday from 4.95%.

US data was mixed on Friday with strong looking non-farm payrolls figures and a weak consumer confidence report.

The US economy added more jobs than expected in April, while the unemployment rate remained unchanged, according to the US Bureau of Labour Statistics.

Non-farm payrolls rose 115,000 in April, slowing from 185,000 in March, but beating 62,000 FXStreet consensus.

March’s total was revised upwards by 7,000 from 178,000, while February’s total was revised down by 23,000, meaning 156,000 jobs were shed.

The unemployment rate stayed stable at 4.3% in April, in line with consensus.

Morgan Stanley said the report will “build more confidence” in labour market stability while the Federal Open Market Committee “remains uncertain about whether higher oil prices will spill into slower growth or faster core inflation. Labuor market stability gives the Fed time to wait.”

But ING said while a second consecutive firm jobs report is a “big win” for the US economy, other labour market data is “not as firm” and consumers “certainly aren’t recognising the strength of this data point.”

Reflecting this, US consumer sentiment came in at its lowest-ever recorded level in May, according to a University of Michigan survey, with Americans battered by high prices and concerns about the Iran war.

The university’s Index of Consumer Sentiment came in at 48.2 in May, its lowest level since data collection began in 1952, and below 49.5 market consensus.

The pound firmed to 1.3623 dollars on Friday afternoon from 1.3616 on Thursday. Against the euro, sterling was little changed at 1.1568 euros from 1.1567 on Thursday.

Sterling and UK gilts held steady as markets digested the implications of heavy losses suffered by the Labour government in UK local elections.

Prime Minister Sir Keir Starmer pledged to fight on but the defeat could yet speak a leadership challenge.

On the FTSE 100, BT led the way, rising 6.6% as Goldman Sachs and JP Morgan sang its praises.

JP Morgan reiterated an “overweight” rating and raised its share price target to 310 pence from 300p.

In a research note, titled: “Entering the next leg of the re-rating journey,” JPM highlighted an improving equity free cash flow position that could support a doubling in BT’s dividend by 2030.

Goldman Sachs retained its “buy” rating and “materially” raised its mid-term dividend per share estimates.

Earlier this week, Bank of America upgraded BT, citing its hopes for an upturn in the dividend.

British Airways owner IAG closed down 2.8%, although above earlier lows, as it warned of a profit hit from rising fuel costs.

Chief executive Luis Gallego said higher fuel prices will “inevitably lead to lower profit this year than we originally anticipated.”

IAG now expects full-year fuel costs of £9 billion, including hedging positions, which would be 27% higher than £7.08 billion in 2025, and above the £7.0-7.4 billion range IAG forecast in February.

Intertek was down 2.7% as it rejected a third bid from EQT, believing it “significantly undervalues” its prospects.

Gold traded lower at 4,711.50 dollars an ounce on Friday, from 4,742.97 on Thursday.

The biggest risers on the FTSE 100 were BT Group, up 14.60p at 236.20p, Whitbread, up 88.00p at 2,410.00p, JD Sports Fashion, up 2.08p at 75.08p, Vodafone, up 2.65p at 118.65p and Entain, up 10.40p at 548.00p.

The biggest fallers on the FTSE 100 were Lion Finance, down 550.00p at 11,030.00p, Babcock International, down 47.50p at 1,052.50p, Metlen Energy & Metals, down 1.50p at 36.30p, Rolls Royce, down 39.20p at 1,219.80p and BAE Systems, down 58.00p at 1,933.80p.

Monday’s global economic calendar sees China CPI and PPI data and US home sales figures.

Monday’s local corporate calendar has half-year results from contract caterer Compass.

India’s state-run oil marketing companies are absorbing losses of nearly Rs 30,000 crore every month to keep petrol, diesel and LPG prices unchanged despite the sharp surge in global energy prices triggered by the West Asia conflict, government officials and sources, cited by PTI said on Friday.The financial burden on Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd comes as crude oil prices climbed from about $70 per barrel two months ago to nearly $120 amid supply disruptions and rising shipping risks in the Strait of Hormuz.At a briefing on developments in West Asia, joint secretary in the ministry of petroleum and natural gas Sujata Sharma said the government had so far prioritised shielding consumers from higher fuel costs despite volatility in international markets. “It has been government’s endeavour to keep prices stable so far and that there is no price increase for consumers,” Sharma said. “This has hit finances of OMCs… monthly under-recoveries are of the order of Rs 30,000 crore.”She declined to say whether fuel prices would remain unchanged going forward. “As I said, the endeavour so far has been to see that there is no price increase,” she added.According to PTI sources, daily under-recoveries during April touched around Rs 18 per litre on petrol and Rs 25 per litre on diesel, translating into losses of roughly Rs 700-1,000 crore per day.The sources also said the prolonged pressure could affect the balance sheets and borrowing requirements of oil companies, although investments related to refining expansion, energy security, ethanol blending and transition fuels would continue with government backing.The crisis came after the February 28 strikes by the United States and Israel on Iran escalated tensions across West Asia, disrupting tanker movement across key route Strait of Hormuz and raising freight and insurance costs. India’s dependence on the region left nearly 40 per cent of its crude imports, 90 per cent of LPG imports and 65 per cent of natural gas supplies exposed to disruptions.Meanwhile, the Centre also reduced excise duties to cushion the impact. The special additional excise duty on petrol was cut from Rs 13 per litre to Rs 3, while duty on diesel was reduced from Rs 10 per litre to zero. Officials estimated that without these cuts, under-recoveries would have risen to nearly Rs 62,500 crore. “The government has taken a hit of Rs 14,000 crore a month in cutting the excise duty,” Sharma said.Officials said the combined impact of government intervention and oil company absorption helped India avoid the steep retail fuel price hikes witnessed globally. Petrol prices reportedly rose by about 34 per cent in Spain, 30 per cent in Japan, Italy and Israel, 27 per cent in Germany and 22 per cent in the United Kingdom during the same period.

Air India has told employees that it does not anticipate layoffs despite mounting financial pressures linked to the Middle East conflict, while also directing teams to sharply reduce costs and suspend discretionary spending.During a townhall meeting on Friday, Air India chief human resources officer Ravindra Kumar GP assured staff that job cuts were not expected even as the airline navigates a difficult operating environment.“We don’t anticipate layoffs,” Kumar told employees, according to news agency PTI.The management, however, indicated that annual salary increments would be deferred by at least one quarter due to the uncertain economic situation.Kumar also said the airline would proceed with variable pay for the last financial year and continue with planned promotions.

CEO urges strict cost control

Air India CEO Campbell Wilson asked employees to maintain a “laser sharp focus” on cutting unnecessary expenses and improving operational efficiency.Calling for a “relentless focus on costs in these tough times”, Wilson urged staff to suspend discretionary spending, renegotiate rates wherever possible and defer non-critical expenditures.“There must be a laser sharp focus on eliminating wastage and leakages,” he said, as per PTI.The townhall was also attended by chief financial officer Sanjay Sharma.

Middle East conflict raises pressure

The Tata Group-owned carrier is facing multiple headwinds due to the ongoing Middle East conflict, which has significantly increased operational costs.Airspace restrictions and rising jet fuel prices have added pressure on the loss-making airline at a time when it is implementing an ambitious transformation plan aimed at modernising operations and improving profitability.The conflict-driven disruptions have impacted flight routes and increased fuel expenses for airlines globally, with carriers operating international routes among the worst affected.