Improving economic data from China and unfounded fears US President Donald Trump could escalate the trade war helped the London Stock Exchange start the week in positive territory.
The FTSE 100 leading index of shares closed the day up 89.82 points, or 1.48%, at 6,166.42, and was also boosted by slightly improved manufacturing Purchase Managers’ Index data in the UK showing the sector has improved from record lows in April.
In Europe the French Cac 40 was up 1.43% and the German Dax 30 was down 1.65%.
David Madden, financial analyst at CMC Markets UK, explained: “On Friday, equity markets in Europe sold-off heavily as dealers were worried President Trump would launch a trade-related attack on China, but seeing as that didn’t happen, stocks are rebounding today.
“Looking back on Friday’s move, it is clear that dealers were over fearful, but then again The Donald has form for erratic behaviour so caution was not surprising.”
He added that economic data from China over the past few days, showing the easing of lockdown is bringing the country’s economy back to life, is also having an impact.
US markets were more cautious, however, and the dollar weakened against the pound – holding back the FTSE 100 from closing higher. Typically, the FTSE 100 rises when the pound falls because it becomes “cheaper” to foreign investors who use dollars.
Connor Campbell, analyst at SpreadEx, said: “Sterling added 1.1% against the dollar and 0.8% against the euro, setting aside its Brexit concerns to focus on the various lockdown-easing measures that begin in the UK this Monday (and those that will follow in the next couple of weeks).”
The pound as markets closed was up 0.92% at 1.246 dollars and up 0.76% at 1.121 euros.
In company news, Primark owner Associated British Foods (ABF) said it is working to reopen all its 153 stores in England on June 15.
It said that it expects to have reopened 281 of its stores by that date, having already reopened 112 of its sites across mainland Europe. Investors reacted positively, sending shares up 146p, or 8%, to 1,967p.
Ted Baker said it would need to raise £95 million from investors to reduce its debts as part of a massive turnaround. It said the cash boost will go towards stabilising its finances and follows bosses revealing a £79.9 million loss for the year to January, after a £30 million profit a year earlier.
Shares in Ted Baker slumped 23.3p, or 15.2%, to 130p.
Construction firm Balfour Beatty announced it would scrap a planned final dividend on Monday. But investors appeared ready for the decision, with shares only closing down 0.4p at 250.2p.
Investors in car dealership Marshall Motors were happy to see showrooms reopen, despite bosses saying they expect to report a pre-tax loss during the first half of the year with a “significant impact” of closing sites expected. Shares closed up 2.5p at 115p.
And banknote maker De La Rue said demand for its currencies remains strong, even as people switch to card payments to slow the spread of coronavirus. With fears allayed, shares soared 79.25p to 120p – an increase of nearly 200%.
The biggest risers on the FTSE 100 were Standard Chartered up 31.9p at 400.3p; Associated British Foods up 146p at 1,967p; Pearson up 36.5p at 499.9p; Carnival up 77p at 1,134.5p and IAG up 13.5p at 480.4p.
The biggest fallers were Hikma down 78p at 2,493p: Reckitt Benckiser down 138p at 7,086p; Halma down 38p at 2,292p; Admiral Group down 37p at 2,296p and Croda down 70p at 5,120p.