British stocks rebounded Wednesday as investors bet on easing Middle East tensions following reports of Iranian outreach to U.S. officials. The FTSE 100 gained 0.6% by midday, with the pound climbing 0.1% to $1.3373. European markets also advanced, with Germany's DAX up 1.4% and France's CAC 40 rising 0.8%.

The diplomatic development came as Iranian operatives reportedly contacted the CIA to discuss potential war-ending terms, according to The New York Times. This marks a notable shift in the conflict that began over the weekend, though specific negotiation details remain undisclosed. The news helped reverse earlier losses that saw British stocks trading in the red.

In corporate news, Vistry Group shares plunged 17% after warning margins would decline in 2026 due to pricing incentives for Open Market sales. The housebuilder reported full-year adjusted profit before tax of £268.8 million, up slightly from £263.5 million in 2024, but revenue fell 4% to £4.15 billion. Total completions dropped 9% despite a 3% increase in average selling price.