The FTSE 100 Index bounced back strongly from steep falls in the previous session as latest developments in a roller-coaster week saw markets turn higher.
Volatility has gripped share trading in recent days with sharp falls in global share indices, driven by fears over a Chinese slowdown, interspersed with relief rallies.
Big gains on Wall Street and in Asia overnight saw London’s top-flight climb more than 2%, or 133.6 points, to 6112.8. Germany’s Dax and France’s Cac 40 each added around 3%.
Miners were among those leading the rally in the City. But experts cautioned of more volatility to come amid ongoing concerns over China, the world’s second biggest economy – warning the upturn could prove to be a “dead cat bounce”.
Tony Cross, market analyst at Trustnet Direct, said: “Volatility like this doesn’t tend to disappear fast and with volumes set to thin out ahead of the long weekend, there’s certainly the prospect of seeing more big moves in the near term.”
The FTSE 100 had shed 4.7% on Monday, rallied by 3.1% on Tuesday, and fallen by 1.7% on Wednesday.
But in New York the latest session saw the Dow Jones Industrial Average soar by 4% in its steepest one-day rise in nearly four years.
That came after comments from Federal Reserve official William Dudley that the case for a US interest rate hike next month is “less compelling” given China’s troubles, falling oil prices and emerging market weakness.
China’s Shanghai Composite Index, whose sharp drop on Monday triggered a global sell-off, also raced higher after the Wall Street rally, up 5.3% in its biggest gain for eight weeks, while the Hang Seng Index in Hong Kong surged 3.6%.
Among stocks in London, Asia-focused bank Standard Chartered led the charge, up 38.8p or 5% to 746.1p, followed close behind by miners Anglo American and BHP Billiton, up 31.9p to 696.2p and 40p to 1049.5p respectively.
Elsewhere, challenger bank Aldermore leapt 8% or 22.5p higher to 300.5p in the FTSE 250 Index after seeing interim profits double to £39.5 million, up from £18.6 million a year earlier.
Recruiter Hays climbed too after posting an 18% rise in pre-tax profits to £156.1 million for the year to the end of June – though it said a post-election upturn in activity in the UK and Ireland had not materialised.
Chief executive Alistair Cox said the group, which operates in 33 countries, remained on course to deliver a five-year target to double operating profits by 2018 and the full-year dividend was hiked by 5%. Shares rose 2.9p to 157.1p.
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