London markets closed higher on Thursday as traders bet interest rates were nearing their peak, even after the European Central Bank (ECB) hiked interest rates by 25 basis point.
The FTSE 100 rose 2.1 per cent to trade at 7,686.91 while the FTSE 250 climbed 1.4 to 18,817.33. Markets in Paris and Frankfurt saw slight gains.
Having struggled for direction for much of the day, markets had lift off soon after the ECB’s decision was announced.
Although the ECB hiked interest rates for the tenth time in a row, Fawad Razaqzada, market analyst at City Index said the decision was a “dovish hike”.
In a statement alongside the decision, the ECB said: “The key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.”
“The ECB strongly indicated that we have reached a terminal interest rate, meaning no more hikes are likely moving forward,” Razaqzada continued.
This prompted a broad-based rally on the FTSE 100 with banks and natural resource giants among the biggest winners. The euro meanwhile fell 0.6 per cent against the dollar.
Anglo American topped the FTSE, ending eight per cent higher, while Rio Tinto and Glencore both gained over four per cent.
Among banks, HSBC rose over three per cent while Natwest climbed 2.6 per cent.
Shell climbed 2.4 per cent while BP jumped 3.4 per cent on the back of rising oil prices. A barrel of Brent oil was trading at just over $93.
On the FTSE 250, online rail ticket seller Trainline jumped 12 per cent after unveiling a £50m share buyback programme.
Group net ticket sales grew by nearly a quarter to £2.6bn in the six months to August, taking revenues to £197m, a 20 per cent jump on last year.