April 8 (Reuters) - The UK's FTSE 100 rallied to one-month highs on Wednesday after an agreement between the United States and Iran on a two-week ceasefire, sending global stocks surging and oil prices sharply lower.
U.S. President Donald Trump announced the agreement late on Tuesday, just two hours before a deadline he had set for Iran to open the blockaded Strait of Hormuz or face the destruction of its "whole civilisation".
The last-minute turnaround helped lift sentiment as traders anticipated a revival of shipping through the strait, which handles about one-fifth of global oil and liquefied natural gas shipments.
The blue-chip FTSE 100 index rose 2.9% by 1042 GMT, touching its highest level since March 3, while the midcap FTSE 250 soared 4.5% to its highest since March 10.
* Heavyweight oil companies, including BP and Shell, droppedmore than 5% each, tracking a near 15% plunge in crude prices.[O/R] * Shell cut its first-quarter gas production outlook whilesignalling a surge in oil trading profit and a dent toshort-term liquidity, offering an early glance into the whiplasheffect of the Middle East conflict on oil majors' earnings. * All the other major FTSE 350 subsectors rose, led byrate-sensitive homebuilders, banks and travel companies. * Investors priced in around 35 basis points of interestrate hikes by the Bank of England this year - or one and twoquarter-point increases - compared with 63 bps on Tuesday. * British house prices slid unexpectedly last month aseconomic uncertainty stemming from the Iran war hurt buyerdemand, according to mortgage lender Halifax. * British Prime Minister Keir Starmer will travel to theGulf on Wednesday to hold talks with regional leaders to try toensure the Strait of Hormuz opens permanently after a U.S.-Iranceasefire, his office said. * Gamma Communications jumped almost 14% after the Britishtelecom firm said it is in preliminary discussions with a numberof parties for a potential sale.(Reporting by Sruthi Shankar in Bengaluru; Editing by Vijay Kishore)
