Traders headed out into the field to buy shares today as Russian president Vladimir Putin ordered troops on exercises near Ukraine’s borders back to base.
The threat of war between Ukraine and Russia triggered a global sell-off on Monday but Putin’s gesture was taken as an attempt to de-escalate the crisis and prompted an abrupt about-turn in sentiment.
The FTSE 100 recovered the bulk of the losses in the previous session, gaining 1.1 per cent or 73.23 points to 6781.58, while stock markets across Europe also registered gains of 1 per cent or more.
Even Moscow’s Micex index, battered by its worst day since November 2008 on Monday, moved on to the front foot, rising 3.5 per cent, while the Russian rouble firmed against the dollar.
Other signs of recovering risk appetite emerged in the bond market as investors dumped gilts, bonds and US Treasuries as well as gold. Brent crude dropped back more than a dollar a barrel to $109.27.
IG market analyst David Madden however warned turbulent conditions were likely to linger as long as the stand-off between Russia and Ukraine continued: “We’re not out of the woods.
The drop in equity markets yesterday, and correction today, highlights how volatile an issue this is. We may have pulled back most of yesterday’s losses but the rally is fragile".