The FTSE 100 is set to open higher as markets respond positively to easing tensions in the Middle East. Investors are betting that the risk of a broader conflict involving Iran has diminished, lifting sentiment across European equities. The index, which tracks the UK's largest companies, has been volatile in recent weeks amid geopolitical uncertainty.

The potential de-escalation comes after diplomatic efforts and signals from Tehran suggesting a more restrained approach. This has helped reduce safe-haven demand for assets like gold and government bonds, redirecting capital toward riskier equities. The FTSE 100, heavily weighted toward energy and mining stocks, stands to benefit from improved risk appetite.

Market participants are also watching for corporate earnings and economic data that could influence the index's trajectory. While the geopolitical backdrop has improved, traders remain cautious about inflation concerns and central bank policy. The FTSE 100's performance will depend on whether this optimism translates into sustained buying interest or proves short-lived amid broader macroeconomic headwinds.