The FTSE 100 was down 1.5% at 9.30 am. Investors are bracing for a volatile short-term market trajectory due to increased interest rate volatility, persistent inflation concerns, and geopolitical risks.

The tensions in the Middle East, particularly between Israel and Iran, have escalated, with Israel promising retaliation for an Iranian attack. This situation has added to the market's unease, already affected by strong US retail sales data that suggests a more robust long-term economic growth, reducing the likelihood of interest rate cuts in 2024. Oil contracts advanced, with Brent crude and WTI both registering gains.

In corporate news, DS Smith has endorsed an all-share takeover by International Paper, valuing the company at approximately £5.8 billion. The deal represents a slight premium over DS Smith's closing price on Monday.

Other key economic events to watch include the International Monetary Fund's (IMF) global economic forecasts, the ZEW economic sentiment index in Germany, US industrial production data for March, and corporate earnings reports. Notable earnings releases expected include those from Bank of America, Morgan Stanley, and luxury giant LVMH. Investors will also pay attention to the UK's inflation reading on Wednesday, expected to show a further easing of inflation to 3.1% last month.

In other news, Britain’s unemployment rate for the three months to February rose to 4.2% from 4.0% in the previous period, with average earnings growth exceeding expectations. The Chancellor of the Exchequer Jeremy Hunt is set to emphasize the UK economy's positive trajectory during his visit to the US for the IMF spring meetings, while Prime Minister Rishi Sunak will urge Israeli restraint in response to recent tensions.

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