April 8 (Reuters) - The UK's FTSE 100 rallied to a more than one-month high on Wednesday after an agreement between the United States and Iran on a two-week ceasefire sent 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.
But even as Israel and the United States paused their attacks on Iran, Israel escalated its parallel war in Lebanon.
The blue-chip FTSE 100 index closed up 2.5% at 10,608.9 points, its highest end-of-day level since March 2, while the midcap FTSE 250 rose 4.1% to its highest since March 11.
* Heavyweight oil companies, including BP and Shell, dropped5.8% and 4.7%, respectively, tracking a double-digit plunge incrude 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 home builders, banks and travel companies. * Investors priced in around 32 basis points of tighteningby the Bank of England this year compared with 63 bps onTuesday. * British house prices fell 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, his office said. * British telecoms firm Gamma Communications jumped morethan 16% after it said it was in preliminary discussions with anumber of parties for a potential sale.(Reporting by Sruthi Shankar in Bengaluru; Editing by Vijay Kishore, Kirsten Donovan)
