The FTSE 100 closed three per cent higher today at 6,081, as China's decision to cut a key interest rate restored confidence in UK investors.
The People's Bank Of China announced this morning that it was going to lower the one-year lending benchmark rate by 25 basis to 4.6 per cent. This is the fifth time it has cut rates in the last 12 months.
The change is being made to help stabilise the world's second biggest economy, after fears of a slowdown sent global markets tumbling yesterday. Nearly £74bn was wiped off the FTSE 100 by the time trading ended on Monday.
Today's improvement has added £46.7bn back on to the index – its first rise in over a week, after the blue-chip index suffered 10 consecutive days of declines. This was its largest one-day increase in four years.
The biggest riser of the day was Copper production company Antofagasta, which was 8.7 per cent higher at the end of trading.
Across the rest of Europe similar gains were made. The FTSEurofirst 300 index closed 4.4 per cent higher, while Germany's Dax index and France's CAC went up by 5.3 per cent and 4.4 per cent, respectively.
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