FTSE 100 bounces back with 1.9% surge after Black Monday.

A Chinese stock investor gestures near a board with green numbers representing falling stocks at a b

A Chinese stock investor gestures near a board with green numbers representing falling stocks at a brokerage house in Hangzhou in eastern China's Zhejiang province. - Credit: AP

The FTSE 100 Index bounced back above the 6,000 mark after surging by nearly 2% as it recovered following one of its worst sessions in recent years.

The rise of 115 points added about £29 billion back on to the value of the UK’s top 100 listed companies after about £74 billion was wiped off the FTSE 100 in the previous session.

But the blue chip share index was still trading at lows not previously seen since the start of 2013 after Monday saw the top flight fall by 4.7%.

The one-day drop - which followed on from a 2.8% fall on Friday - had not been equalled since September 2011. There had not been any worse sessions since the dark days of the downturn in 2009.

Investors on Monday had been reacting to the latest stock market rout in China with the Shanghai composite seeing its worst fall for eight years meaning that all its gains for 2015 had been wiped out.


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Today’s bounce-back for the FTSE 100 saw a rise of more than 1.9%, despite further falls in Asia overnight. But the index was still in “correction” territory, more than 10% off its all-time closing high of 7,104 in April.

Global markets have been rocked in recent weeks by China’s slowing economy and the depreciation of the yuan - as well as plunging commodity prices and fears over the timing of the next US interest rate hike.

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But almost all top-flight shares were ahead today, with the index pulled higher by a recovery in mining stocks such as BHP Billiton and Antofagasta - which have been pounded by the falls in commodity prices caused by China’s woes.

Also up sharply was More Than insurer RSA, after it said was willing to back a £5.6 billion takeover by Swiss rival Zurich.

Tony Cross, market analyst at Trustnet Direct, said: “The FTSE 100 has bounced out of the starting blocks as Tuesday’s session gets under way with some evidence of bargain hunters jumping in although the gains are looking somewhat tempered.

“However there’s that overarching concern that historically market movements like we saw on Friday and Monday are rarely isolated events so the issue will be that the choppy market conditions could well prevail for some time yet.”

Connor Campbell, financial analyst at Spreadex, said: “After the market-wide panic of ‘Black Monday’ cooler heads seem to be prevailing this Tuesday morning as investors begin to pick up the pieces, even if China itself continues to struggle.”

The FTSE 100 Index equalled its worst one-day fall since the financial crisis yesterday as it plunged by nearly 5%.

London’s top-flight was more than 6%, or 400 points, lower during the session as contagion from China’s growth slowdown spread across the globe.

The FTSE pared back some of the losses later but still closed down by 4.7%, or 288.8 points, a loss of £74 billion from the value of its constituent companies and equalling a 4.7% drop seen in September 2011.

Yesterday’s figures took the market into territory last seen in the dark days of the downturn. In March 2009, there was a single-day fall of 5.3% while there were even bigger falls late in 2008 - including an 8.8% decline in October that year.

Trading screens turned red today as the latest dive added to a drop of nearly 3% last Friday. The index fell below the 6,000-mark before reaching levels not seen since November 2012, at below the 5,800-mark, before heading higher to close at 5898.9.

The FTSE 100 saw its 10th session in a row of falls - the worst losing streak since it finished lower for 11 days in succession in 2003.

Investors were reacting to the latest stock market rout in China overnight. The Shanghai composite, down heavily in recent weeks, slipped by more than 8% and has now lost all its gains for 2015 - despite attempts by Beijing to arrest the slump.

Markets in Europe took it as a cue for another bout of selling, before a steep opening fall of more than 6% on Wall Street markets added to the pressure.

Global markets have been rocked in recent weeks by China’s slowing economy and the depreciation of the yuan - as well as plunging commodity prices and fears over the timing of the next US interest rate hike.

The worries have seen the FTSE 100 officially enter “correction” territory more than 10% down from its all-time high of 7104 in April.

The latest fears about China boiled over last week after a key manufacturing index for the country showed the sector’s decline worsening, with performance at its lowest level in more than six years.

Jasper Lawler, market analyst at CMC Markets, said: “The Chinese government’s intervention into stock markets has proven counter-productive.

“Forcing institutions to buy and banning them from selling has just added to the panic of retail investors who make up 80% of stock ownership in China.”

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