The European markets surged higher as Donald Trump’s order for pandemic relief measures lifted traders in the face of negative economic headlines.
London’s markets shook off a continued rise in unemployment to jump higher, although they slipped slightly later in the session to sit significantly below midday highs.
The FTSE 100 closed 103.75 points higher at 6,154.34 at the end of trading on Tuesday.
Michael Hewson, chief market analyst at CMC Markets UK, said it was “an absolutely stellar session” for European markets.
He said they were boosted by “hopes of a new US stimulus plan, with President Trump’s recent executive orders being used as a starting point baseline, a possible capital gains tax cut, as well as reports of a new coronavirus vaccine which is expected to go into full production in September.
“The FTSE 100 also rallied strongly, hitting one-week highs in the process, led by financials and oil and gas stocks, with the oil price pushing up close to its best levels since March.”
Elsewhere in Europe, indices were also bolstered by broad-based gains across the German auto sector, as car sales continue to surge overseas.
The German Dax increased by 0.66%, while the French Cac moved 2.41% higher.
Across the Atlantic, the Dow Jones leapt for the second consecutive day as investors mulled the prospect of a US capital gains tax cut, along with other stimulus measures.
Meanwhile, sterling was muted as traders digested the Office for National Statistics’ latest set of labour figures, which revealed 730,000 people have been taken off payrolls since the beginning of the crisis in March.
The pound fell 0.03% versus the US dollar at 1.307 and was down 0.23% against the euro at 1.111.
The airline and travel sectors were particularly boosted by reports of the new Russian coronavirus vaccine, sending the likes of IAG and Carnival higher.
In company news, Holiday Inn owner InterContinental Hotels Group saw shares rise despite revealing half-year losses following a “substantial” hit from the coronavirus crisis.
The group confirmed it is also cutting about 10% of its corporate-level workforce across global operations.
Shares increased by 192p to 4,193p at the close of play.
Unilever slipped into the red after its chief finance officer, Graeme Pitkethly, sold 46,000 shares for close to £2.1 million. Shares closed 35p lower at 4,485p.
Elsewhere, Cineworld shares soared after a judge in New York agreed to terminate the Paramount Decrees – a set of competition rules introduced in the late 1940s that were designed to end Hollywood’s stranglehold on the distribution of movies.
It jumped by 11.89p to 52.94p after the ruling stoked takeover speculation.
The price of oil nudged higher as energy traders followed wider positivity in the global markets.
The price of a barrel of Brent crude oil increased by 0.31% to 45.21 US dollars.
The biggest risers on the FTSE 100 were GVC, up 69p at 785p, IAG, up 17p at 218.7p, ITV, up 3.62p at 65.64p, and Evraz, up 19p at 345.3p.
The biggest fallers of the day were Fresnillo, down 86.5p at 1,206.5p, Polymetal, down 81.5p at 1,931.5p, Rentokil, down 12.2p at 527.2p, and Hikma, down 50p at 2,247p.