London’s top flight index regained its composure after a sharp rise in business optimism in the eurozone’s powerhouse German economy.
The FTSE 100 index slumped by more than 100 points or 1.5% yesterday as the minutes of last month’s US Federal Reserve meeting showed that a number of members were concerned about the cost and risks of carrying out further asset purchases.
But the slump proved short-lived in London, with the FTSE 100 Index retracing steps towards its recent five-year high, closing up 44.2 points at 6335.7 - above where it started the week.
On Wall Street the Dow Jones Industrial Average also opened higher, but bullish sentiment was kept in check ahead of the Italian elections with the rise of Silvio Berlusconi fuelling fears the country could face future political deadlock.
Capital Spreads markets analyst Angus Campbell said he remained guarded about prospects for a further improvement in the equity markets.
He said: "Yesterday’s decline was on strong volumes and this is often seen as a technical sign that further weakness may be forthcoming. There are probably many bulls who’ve also been waiting for things to get a little cheaper before diving in."
In the currency markets the pound continued to be buoyed by yesterday’s public sector borrowing figures which showed a better-than-expected tax take in January.
Sterling was up against the euro at 1.16, helped by the European Union Commission’s extremely downbeat growth forecasts for the European economy for 2013. It was flat against the US dollar at 1.53.
The biggest FTSE 100 risers were CRH up 58p to 1394p, Polymetal International ahead 36.5p to 982.5p, Serco 20p higher at 588p and Sage up 10.1p to 343p.
The biggest FTSE 100 fallers were GKN down 3.3p to 252.1p, Rio Tinto off 42.5p to 3476p, Randgold Resources 60p lower at 5390p and G4S down 2.7p to 287.1p.