11:48 AM EST, 11/02/2026 (MT Newswires) -- British equities started the week higher, with the FTSE 100 up 0.35% on Monday's close, as easing concerns over an immediate military escalation between the US and Iran sent oil prices lower, weighing on energy and commodity stocks. Fears of an escalation following Tuesday's US midterm elections eased after US President Donald Trump signaled a willingness to allow more time for diplomacy with Iran, with both sides continuing to exchange messages. Tehran also confirmed that bilateral communications were ongoing. In economic news, British manufacturing activity strengthened in October, with output and new orders increasing at a faster pace amid improved market conditions and growth across the consumer, intermediate and investment goods sectors. In line with the preliminary reading, the final seasonally adjusted S&P Global UK Manufacturing PMI jumped to a five-month high of 52.8 in October, from 51.9 in September. Outlook reached an eight-month high. "As well as higher wage costs, manufacturers are being buffeted by rising fuel, energy and transportation costs as supply chain shocks and delays continued to drive up inflationary pressures," S&P Global Market Intelligence Director Rob Dobson said. "Input prices consequently rose to one of the greatest extents in the past four years in October which, alongside the signs of resilience in the manufacturing sector, will further shorten the odds of interest rate hikes to come from the Bank of England." Next, investors will receive the final S&P Global composite PMI for October on Wednesday; new car sales, construction PMI, and the Bank of England's interest rate decision on Thursday; and the Lloyds house price index on Friday. "The BoE has taken its time so far. A substantially higher degree of inflation tolerance has kept the central bank on hold," BofA Global Research said. "But the economy is arguably showing some genuine resilience, even signs of growth improvement, despite the energy shock. So the arguments for the BoE looking through the energy-driven increase in headline inflation are running out; and the reasons for a short insurance hike cycle are up. We expect a hike with a 7-2 vote [this] week, followed by a second in February." In corporate news, oil major BP (BP.L), down 4.65%, completed the sale of a 65% stake in its Castrol unit to US-based alternative investment firm Stonepeak for after-tax proceeds of $6 billion. Castrol will operate as a standalone company, with BP retaining a 35% stake in the company. Meanwhile, Shell's (SHEL.L) Shell Trading Rotterdam unit entered a long-term exclusive offtake contract with Green Sky Manara for 150,000 tonnes of sustainable aviation fuel annually, or an equivalent volume of hydrogenated vegetable oil alongside bionaphtha and biopropane from a facility in Port Nador, Morocco. The oil and gas major's shares closed 3.10% lower.

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