By Shashwat Awasthi
(Reuters) - London's FTSE 100 eked out modest gains on the back of strength in mining companies and oil stocks on Tuesday, alleviating some anxiety after the United States imposed more sanctions on Tehran and before Sino-U.S. trade talks this week.
The FTSE 100 erased earlier losses to edge 0.1% higher, while the mid-cap FTSE 250 lost 0.1%.
Shares of heavyweight miners rose after a strike at a major mine in top copper producer Chile highlighted supply constraints, while oil firms advanced in anticipation of a bullish reading of U.S. crude stock data.
Investors had been subdued for large periods of the session after President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions, which further strained the geopolitical dynamics in the Middle East.
Uncertainty over how talks between Trump and his Chinese counterpart Xi Jinping will pan out at the G20 summit has also had an impact, with markets fearful that the protracted trade war, which has stunted global economic growth, could escalate.
"Partly a holding pattern, partly a surreptitious drift to safety is a fair way to characterise the market mood as global tensions simmer ahead of the G20 meeting," Cityindex analyst Ken Odeluga said.
Sales at British supermarket chains fell during the 12 weeks to June 16, losing further ground to discounters Aldi and Lidl, industry data showed, leading shares of Tesco (LON:TSCO) and Morrisons 1% lower.
Brexit concerns also re-emerged and the pound, which earlier capitalised on the broader weakness of the dollar as traders bet on more dovish signals from the U.S. Federal Reserve, came under pressure again.
Sterling skidded after eurosceptic Boris Johnson, the favourite to replace Prime Minister Theresa May, said he was serious about a no-deal Brexit if the bloc refused to re-negotiate a divorce deal.
On the mid-cap index, Petrofac (LON:PFC) tumbled 6.5% after the oilfield services provider, dogged by legal challenges over the last two years, said its business was hit by challenges in Saudi Arabia and Iraq.
Rail operator Stagecoach Group (LON:SGC) gave up 6.6% ahead of its annual results on Wednesday.
Small-cap Lookers tanked 24% to its lowest in more than seven years, after the car dealership said Britain's financial watchdog was investigating its sales processes.
(This story corrects first paragraph to remove extraneous word fell).