The FTSE 100 defied a gloomy economic survey and higher-than-expected public borrowing data to surge on Wednesday, after US President Donald Trump dialled back some of his trade war vows.
London’s blue-chip index jumped 74.6 points to finish the day at 8,403, a 0.9% rise.
Mr Trump said on Tuesday that sky-high trade tariffs on China will “come down substantially but it won’t be zero”.
Meanwhile, he also softened his rhetoric on firing the head of the US Federal Reserve, Jerome Powell, saying he has “no intention” of sacking the central banker.
The row back comes days after the President called Mr Powell a “major loser” whose “termination cannot come fast enough”.
His latest comments sparked a global stock market rally, with Germany’s Dax rising 3% and France’s Cac 40 rising 2.1%.
Meanwhile, on Wall Street, the S&P 500 was up 1.8% and the Dow Jones was ahead by 1.4% shortly after UK markets closed.
Axel Rudolph, an analyst at trading platform IG, said: “Global stock indices regained all of Monday’s losses and rallied strongly as US President Trump assuaged investors’ concerns about the Fed’s independence by no longer wishing to fire its chair Jerome Powell.
“Hopes of a potential de-escalation in the US-China trade war and better-than-expected earnings by the likes of Tesla and Boeing also helped improve sentiment.
“The economic backdrop remains less than rosy though, with UK public borrowing costs coming in above forecasts, the German private sector falling back into contraction and euro area economic activity nearly stagnating.”
Sterling was down 0.14% against the dollar at 1.3254 while it was 0.1% down against the euro at 1.1676.
In company news, online retail company THG rejected a bid for its Myprotein business worth up to £600 million from a firm led by a former director.
THG, which also owns Cult Beauty, said it rebuffed a “largely unfunded” and “highly conditional” approach from Selkirk – a firm set up by two early backers of THG, including Iain McDonald, a previous non-executive director at the firm.
The cash-and-shares proposal valued Myprotein at between £400 million and £600 million, according to THG.
Shares in THG fell 1.2% on Wednesday.
Meanwhile, household goods giant Reckitt warned the sale of its Cillit Bang and Air Wick arm might be delayed by market conditions as it revealed revenues fell across the division.
Reckitt – which put its essential home cleaning products business up for sale last summer as part of a major overhaul – said it was still aiming to sell the division this year but admitted that “market conditions may impact this timeframe”.
Shares in the group fell 5.7%.
The biggest risers on the FTSE 100 were Croda, up 223p to 2947p, Antofagasta, up 110p to 1675.5p, Standard Chartered, up 65p to 1087.5p, HSBC, up 44.9p to 845.2p, and Babcock, up 40.5p to 789p.
The biggest fallers on the FTSE 100 were Reckitt, down 282p to 4668p, Endeavour Mining, down 122p to 2038p, Fresnillo, down 54p to 985p, Severn Trent, down 79p to 2682p, and Vodafone, down 1.96p to 70.24p.
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