London markets bounce back after bruising European sell off

London markets bounced back today from a bruising session earlier in the week as investors pared back their concerns over some of their world’s top economies dropping into recession and shrugged off drama at Downing Street.

The capital’s premier FTSE 100 index surged 1.17 per cent to 7,107.77 points, while the mid-cap domestically-focused FTSE 250 index, which is more aligned with the health of the UK economy, climbed 1.52 per cent to 18,594.48 points.

The City was caught up in a sell off of European shares earlier this week that was sparked by traders fretting over soaring inflation and higher interest rates pushing the global economy into reverse.

Commodity prices suffered heavy blows, weighing on the likes of the oil mega caps BP and Shell.

Inflation has climbed to a 40 year high of 9.1 per cent in the UK, prompting the Bank of England to hike interest rates at each of its last five meetings, sending them to the highest level since 2009.

However, the capital’s top indexes snapped back today.

Stronger risk appetite comes despite prime minister Boris Johnson seemingly on the brink of being ousted by members of his cabinet.

The pound tumbled against the dollar, weakening 0.4 per cent to buy $1.1907, primarily driven by growing recession risks and greater political uncertainty. Yields on UK government debt were mixed. Yields and prices move inversely.

Asset manager Abrdn was the second biggest riser on the FTSE 100, adding over five per cent after it announced a fresh share buyback drive.

Oil prices moved lower, intensifying this week’s sell off.