March 4 (Reuters) - UK shares stabilized on Wednesday after a two-day slump due to an escalating war in the Middle East, while shares of home builders slumped following mixed results and leadership changes at Barratt Redrow and Vistry.
Heavyweight lenders, which took a beating on economic concerns stemming from the war this week, led the recovery with HSBC, Standard Chartered and Barclays up about 0.9% each.
The FTSE 100 index rose 0.7% at 1124 GMT after the escalation in the Middle East conflict over
the weekend pushed the index almost 4% below its record high on Friday. The FTSE 250 midcap index also firmed 0.7%.
Despite continued military actions by Israeli and U.S. forces against Iran, prompting retaliatory strikes around the Gulf, investors found reassurance in U.S. President Donald Trump's promise of political risk insurance and financial guarantees for maritime trade in the Gulf.
It is one of the administration's most aggressive steps yet to contain soaring energy prices amid escalating conflict in the Middle East that has stoked worries about global inflation.
The latest survey showed UK's services sector grew robustly last month, while job cuts and price pressures persisted, a potential worry for the Bank of England ahead of this month's interest rate decision.
Investors see a one-in-three chance that the BoE would trim borrowing costs at its March 19 meeting.
Metro Bank rose 1.7% after the lender forecast a key profitability metric to more than double over the next six months and nearly triple over the next 18.
Barratt Redrow fell 1.2% after the UK's largest homebuilder said it had appointed Ventia CEO Dean Banks as its new chief executive, with David Thomas to retire after more than a decade at the helm.
Smaller peer Vistry's shares slumped nearly 20% to the bottom of the midcap index after it warned profit margins would fall in 2026 and that CEO and executive chair Greg Fitzgerald was to retire.
(Reporting by Medha Singh in Bengaluru; Editing by Vijay Kishore)
