Tuesday market close: Rebound as China cuts rates

Stock markets bounced back today, regaining some of the ground recently lost after China cut its main interest rate for the fifth time in nine months to bolster its slowing economy.

The FTSE 100 rebounded in early trading

The FTSE 100 Index jumped 182.47 points to 6,081.34, after Chinese interest rates were reduced by another 0.25 percentage points to 4.6 per cent following punishing falls in equities over recent days.

The market added about £47 billion back on to the value of the UK’s top 100 listed companies, after £74bn was wiped off the index in the previous session.

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The top flight lifted 3.09 per cent, its biggest one-day rise since 7 September 2011, when it climbed by 3.14 per cent.

Chris Beauchamp, senior market analyst at IG, said at this stage it would be “foolhardy to try to gauge whether we are at the ‘end of the beginning’ or the ‘beginning of the end’ where this sell-off is concerned”.

He added: “But the strong moves higher in UK-listed banks and miners is an indication that there is still an appetite to pick up equities when the opportunity presents itself.

“Rational assessment of fundamentals has been rather ignored in recent days, but with a US economy still improving, a rate hike there now a much-reduced prospect and signs of growth in the UK and Europe, buying may not be the apparently-foolish move that it first appears.”

London-listed mining giants have been badly hit, but their shares were seeing a recovery in the latest session.

BHP Billiton was one of the biggest climbers in the rebound, despite posting worse-than-expected annual results for the year to the end of June. Shares rose more than 5 per cent, or 53.5p, to 1,021p.

Elsewhere in the sector, there was also a rise for Antofagasta despite its own set of grim results. Underlying earnings for the first half fell 48.6 per cent but shares rose almost 9 per cent, or 46.5p, to 579.5p.