The stock index of the UK’s biggest publicly-listed companies edged higher on Friday after concerns eased over the state of the US economy.
The FTSE 100, which is made up of the country’s biggest businesses including banks, airlines and housebuilders, rose in early trading.
It follows stronger trading in the US where stock markets had their best day in almost two years on Thursday.
Global financial markets have been spooked in the past seven days over fears that world’s biggest economy could be heading for a slowdown.
But on Thursday, official data revealed US unemployment claims rose by less than expected.
The benchmark S&P 500 index ended the day 2.3% higher. The Dow Jones Industrial Average rose 1.8%, and the Nasdaq jumped 2.9%.
In London, the FTSE 100 ticked up 0.7%. Stock markets indexes in Paris and Frankfurt followed a similar path.
Stocks in Asia made modest gains, recovering some of the losses after Japanese indexes had their worst day since 1987 earlier in the week.
“The [US] latest jobless claims data, though not normally a major market event, supports the view that recent pessimism may have been overdone,” said UBS Global Wealth Management.
Official figures from the US Labor Department showed first-time claims for unemployment benefits in the US had fallen more than expected to 233,000 last week.
But despite the apparent recovery in global markets, analysts warn that trading will likely remain choppy for the time being.
“The market volatility is creating trading opportunities for investors over the short term,” said Peter McGuire from trading platform XM.com.
“It will be a bumpy ride over the election season and we all await the [US Federal Reserve] policy decision in September.”
The Federal Reserve held off cutting interest rates last week – something that typically boosts growth – in contrast to other central banks such as the Bank of England.
But, this week’s market upheaval stoked further speculation about when – and by how much – the Fed will cut borrowing costs.
“[The] Fed is now likely to cut rates up to 50bps in September which in turn supports expanding valuation for the market,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners.