The FTSE 100 index rebounded on Friday, tracking Wall Street which recovered overnight after a steep sell-off.
London’s blue-chip index hit a two-and-a-half year low on Thursday after volatile trading in the US saw stocks drop but then end the day in the green. European markets opened higher on Friday, bouncing back from the heavy losses as global markets strengthened.
The FTSE 100 closed 149.29 points, or 2.27%, higher at 6,733.97 – while Germany’s DAX rose 1.71% and France CAC grew 1.43%.
David Madden, market analyst at CMC Markets, said stock markets in 2018 experienced a lot of volatility on bullish investor sentiment.
“In the first quarter, several of the major indices racked up fresh all-time highs, while many reached multi-year highs. With the exception of the major US indices, stock markets around the world began to retreat in the second half.
“The outlook for the global economy was looking better in the first half than it is now, and some investors saw the declines in stocks in recent months as an opportunity to buy into the market.”
Mr Madden said it was not just investors caught up in the bullish sentiment but companies too, with some major mergers and acquisitions made in 2018, but he noted that 2019 could start off softer due to concerns about global growth.
Meanwhile, the pound rose 0.4% against the US dollar at 1.269 and was up 0.3% versus the euro to 1.109 at the London market close.
The biggest corporate news story was HMV, which is poised to become the first high street casualty after Christmas as it teeters on the brink of administration, endangering thousands of jobs.
The music chain, which trades from around 130 stores and employs more than 2,000 staff, is set to appoint corporate undertakers at KPMG as administrators amid a cash crisis.
HMV caps a torrid year for retailers. Notable high street names such as Poundworld, Toys R Us and Maplin have all gone bust in 2018, while the likes of Marks & Spencer and Debenhams have announced plans to shutter stores.
Several others, including Superdry, Carpetright and Card Factory, have issued profit warnings.
High street retailers have been battling the rise of online shopping, higher costs and plummeting consumer confidence as shoppers rein in spending amid Brexit uncertainty.
In other news, Royal Dutch Shell completed the sale of its assets in New Zealand for 578 million US dollars (£456 million).
The deal is part of a 30 billion US dollar (£23 billion) divestment drive that has seen Shell offload assets across the world. The energy titan is also in the middle of an ambitious cost-cutting plan.
London-listed Shell shares closed 51.5p up to 2,301p.
Oil prices had a mixed day of trading as traders mulled crude and natural gas inventory data. Brent crude, the international benchmark, traded down 0.97% at 53.06 US dollars (£41.79).
The biggest risers on the FTSE 100 were British American Tobacco up 106.5p to 2,569p, John Wood Group up 21p to 510.4p, Legal & General up 9.3p to 233p, and Melrose Industries up 6.45p to 162.2p.
The biggest faller on the FTSE 100 was Randgold Resources down 114p to 6,546p.