Investing.com -- British shares declined on Friday, while the pound fell against the dollar, dragged down by escalating Middle East tensions after Israeli strikes on Iran triggered a broader global market downturn.

The blue-chip index FTSE 100 dropped 0.3% and the British pound fell 0.1% against the dollar to 1.3595. 

European markets also experienced a downturn, with Germany’s DAX index slipping 1.09% and France’s  CAC 40 falling 1.04%.  

Israel strikes Iran

Israel launched widespread airstrikes on Iran early Friday, targeting multiple military and nuclear sites, while declaring a state of emergency at home amid warnings of imminent retaliation.

Iranian media reported unconfirmed claims that Revolutionary Guards chief Hossein Salami was killed.

Tehran vowed a severe response against both Israel and the U.S., though Washington emphasized the strikes were carried out independently by Israel in self-defense.

U.S. President Donald Trump called on Iran to reach an agreement. "There has already been great death and destruction, but there is still time to make this slaughter, with the next already planned attacks being even more brutal, come to an end," he said in a post on his social media platform Truth Social.

Oil and gas stocks rise

U.K. oil and gas shares advanced amid escalating tensions in the Middle East following reports of an Israeli strike on Iran.

Energy majors BP (NYSE:BP) PLC (LON:BP) and Shell PLC (AS:SHEL) saw notable gains, while smaller North Sea producers like Serica Energy PLC (LON:SQZ), Enquest Plc (LON:ENQ), Ithaca Energy PLC (LON:ITH), and Harbour Energy PLC (LON:HBR) also rose.

The gains reflect investor concerns over potential supply disruptions stemming from regional instability.

Markets expect steady BoE rate next week

The Bank of England is widely expected to hold interest rates steady at 4.25% on June 19, as policymakers remain cautious despite signs of cooling inflation and a weakening labor market.

Barclays (LON:BARC), UBS, Deutsche Bank (ETR:DBKGn), and ING all anticipate a 7-2 or possibly 6-3 vote split, with external members like Swati Dhingra and Alan Taylor likely pushing for another 25 basis point cut.

Although inflation is easing and wage pressures are softening, recent mixed economic data, particularly April’s negative GDP and falling payrolls, are prompting a wait-and-see stance.

Analysts still expect rate cuts to resume later this year, with most forecasts pointing to reductions in August and November, and a terminal rate between 3.0% and 3.25% by 2026.

Novo Nordisk (CSE:NOVOb) reclaims top spot in Europe

Novo Nordisk A/S (NYSE:NVO) has reclaimed its position as Europe’s top-valued listed firm, overtaking German software maker SAP SE (ETR:SAPG).

After initially rising, the Danish drugmaker’s shares fell up 0.8% on Friday. The company earlier said it would advance its experimental weight-loss treatment, amycretin, to late-stage clinical trials, following recent guidance from regulators.

Renold surge on buyout deal backed by MPE

Renold (LON:RNO) shares jumped 10.8% on Friday following news that it had agreed to a recommended cash buyout by Bidco, a company backed by private equity group MPE.

According to the deal terms, Renold investors will be offered 82 pence per share in cash, giving the firm a total valuation of around £186.7 million on a fully diluted basis.

Eurozone inflation cools as Germany, Sweden, and France report softer price gains

Inflation in Germany eased to 2.1% year-on-year in May, confirming earlier estimates, according to official data released Friday.

Sweden reported a 0.1% monthly rise and a 2.3% annual increase in consumer prices, aligning with the central bank’s target.

Meanwhile, France’s inflation rate slipped to 0.7% annually, indicating broader signs of weakening price pressures across major eurozone economies.

GSK seeks EU approval to extend Arexvy RSV vaccine coverage

GSK plc (LON:GSK) said on Friday that the European Medicines Agency (EMA) has accepted its request to broaden the approved age range for its respiratory syncytial virus (RSV) vaccine, Arexvy, to include individuals aged 18 and older.

The RSV vaccine is currently authorized for specific age groups within the European Union.

Dundee Precious to acquire British firm Adriatic Metals (LON:ADT1)

Dundee Precious Metals Inc (TSX:DPM) said on Friday that it will purchase U.K.-listed Adriatic Metals Plc (ASX:ADT) in a transaction worth $1.3 billion.

The deal will grant Dundee full control of the Vareš mining project in Bosnia and Herzegovina, broadening its asset base in the region.

Crude gains amid Middle East tensions  

Oil prices surged on Friday as Israeli attacks on Iran intensified concerns over a wider conflict in the Middle East and potential disruptions to supplies from the oil-producing region.

By 16:58 GMT, Brent crude was up 5.9% at $73.42 per barrel, while U.S. West Texas Intermediate gained 6% to trade at $72.14.