Blue-chip stocks have closed little changed on a generally bearish day for shares in London.
The FTSE 100 index closed down just 0.73 points at 9,701.80. The FTSE 250 closed down 38.68 points, or 0.2%, at 21,982.00, and the AIM All-Share closed down 6.47 points, or 0.9%, at 748.32.
London blue-chip index held close to parity gains in banks after lenders passed Bank of England's latest stress tests.
Lloyds Banking Group, Barclays, NatWest and Standard Chartered finished with gains of 2.0%, 1.6%, 1.3% and 1.2% respectively.
In its December Financial Stability Report, the Bank of England lowered the “appropriate benchmark” for Tier 1 capital requirements to around 13% of risk-weighted assets. This equates to a CET1 ratio of around 11%, one percentage point below its previous benchmark of around 14%.
Stress tests, introduced in the wake of the 2008 global financial crisis, examine how banks perform in a severe recession scenario where economic growth plummets and unemployment rises dramatically, along with other associated economic shocks.
The Bank of England concluded that the banking system could continue to support the UK economy even if economic and financial conditions turned out to be materially worse than expected.
“The UK banking system is well capitalised, maintains strong liquidity and funding positions, and asset quality remains strong,” the report states.
Benjamin Toms, an equity analyst at RBC Capital Markets, called the report's conclusions “constructive” but “not an instant game-changer.”
“While the content of this document is constructive for UK banks, the most important elements were already known and expectations were high that this morning's publication could lead to increasingly lower capital requirements,” he said.
However, Jefferies analyst Jonathan Pierce said the report was “clearly positive” and at the “higher end of our expectations.”
Gains in banks were offset by weakness in miners and mixed homebuilders.
Endeavor Mining fell 4.9% and Fresnillo fell 3.3% after the price of gold fell.
Gold was trading at $4,174.00 an ounce on Tuesday, down from $4,236.80.
Also on Tuesday, Endeavor Mining outlined its goals for the next five years, highlighting the potential to expand its operations beyond its current targets in West Africa.
From 2026 to 2030, the London-based gold producer targeting West Africa aims to discover between 12 million and 15 million ounces of mineral resources, at an average cost of less than $40 per ounce.
In European equities on Tuesday, the CAC 40 in Paris closed down 0.3%, while the DAX 40 in Frankfurt rose 0.5%.
Bayer rose 12% in Frankfurt after winning support from Donald Trump's administration to stop US litigation related to its Roundup herbicide.
The company faces lawsuits alleging the herbicide caused health problems, including cancer.
But U.S. attorney John Sauer urged the Supreme Court to limit lawsuits brought against Bayer, supporting the firm's argument that federal pesticide law preempts claims made under state law.
Meanwhile, figures showed the eurozone's annual inflation rate rose against expectations.
The region's harmonized annual consumer price index inflation rate rose to 2.2% in November from 2.1% in October, higher than the consensus cited by FXStreet that expected the rate to remain at 2.1% in November, according to Eurostat.
Monthly harmonized prices fell 0.3% in November, after an increase of 0.2% in October.
ING said: “Markets had not been pricing in a rate cut, and today there is little reason to change that view. The stability of the near-term inflation outlook makes the European Central Bank's projections much more interesting. We expect inflation may fall below target in the coming months, but in the medium term, there appear to be enough inflationary drivers for the ECB not to lean too far towards an overly dovish stance.”
New York stocks rose as the London Stock Exchange closed.
The Dow Jones Industrial Average rose 0.2%, the S&P 500 index rose slightly and the Nasdaq Composite rose 0.3%.
The 10-year US Treasury yield was quoted at 4.10%, widening from 4.09%. The 30-year US Treasury yield was trading at 4.75%, down from 4.74%.
Back in London, housebuilders were in the spotlight after a report showed UK house price growth slowed in November.
Annual growth slowed to 1.8% in November from 2.4% in October, Nationwide said. It was milder than the slowdown to 1.4% expected by the consensus cited by FXStreet.
Additionally, RBC Capital Markets readjusted the ratings of several publicly traded builders heading into 2026.
The broker upgraded Persimmon and Taylor Wimpey to 'outperform' from 'outperform' at Berkeley, and cut Barratt Redrow to 'sector performance' from 'outperform'.
“The UK property market, like many of us, has been in better shape in the past, but it is certainly a long way from being on life support,” RBC said.
Khaki finished up 0.5% and Taylor Wimpey rose 0.8%, but Berkeley fell 3.3% and Barratt Redrow fell 1.7%.
The pound was trading lower at $1.3195 at the close of the London Stock Exchange on Tuesday, down from $1.322 on Monday.
On the FTSE 250, Victrex rose 7.7% as it reported pre-tax profit rose 44% to £33.8m for the year ending September 30 from £23.4m a year earlier.
Elsewhere, On The Beach rose 12% as it hailed “solid” annual profits, with pre-tax profit of 9.5% and more modest revenue of 1.8%.
The package holiday provider believes that consumers will “protect” their getaways even in the face of a difficult economic context.
“We are confident of achieving another record-breaking summer,” said On the Beach.
Brent oil was quoted at $62.81 per barrel at the close of the London Stock Exchange on Tuesday, compared to $63.03 on Monday.
The biggest risers on the FTSE 100 were Airtel Africa up 6.60p to 318.60p, Lloyds Banking Group up 1.86p to 97.36p, Land Securities up 11.50p to 612.00p, Vodafone up 1.58p to 93.94p pence, and Barclays, which rose 6.80 pence to 93.94 pence. 436.40p.
The biggest decliners on the FTSE 100 were Endeavor Mining, down 178.00 pence to 3,434.00 pence. Fresnillo, with a fall of 92.00 pence to 2,728.00 p. Berkeley Group, a fall of 120.00 pence to 3,590.00 p. WPP, down 9.50p to 289.20p. 62.00p to 2,403.00p.
Wednesday's economic calendar includes a series of composite PMI readings, along with ISM services figures and ADP US payrolls data.
Wednesday's UK corporate calendar includes lender Paragon Banking Group's annual results, while mining group Glencore hosts a capital markets day.
Contributed by Alliance News.
