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Markets stage recovery as governments step up coronavirus response

A ban on short-selling on Italian shares and extra cash injections from the US are now in place.

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Markets staged a minor recovery (Richard Drew/AP)

Markets staged a minor recovery (Richard Drew/AP)

Markets staged a minor recovery (Richard Drew/AP)

Leading companies on the London Stock Exchange staged a minor recovery in early trading on Friday as investors started to react to new rules and funding provided by central banks and governments to tackle the coronavirus outbreak.

The FTSE 100 leading index of companies gave back a nearly 8.8% gain to finish the day up around 2.5%.

As markets opened higher in the US, the index pared back its gains.

It remains a long way off the recent falls, which saw more than half a trillion pounds wiped out in less than three weeks.

The FTSE 100 lost almost 11% of its value on Thursday in one of the worst single-day falls since 1987.

Financial Markets Wall Street
Stocks were opening higher on Wall Street a day after the worst drop since 1987 (Mark Lennihan/AP)

Shares in most companies on the index were up, although there was a bruising 9.9% fall for cruise operator Carnival, which announced on Thursday evening it would suspend its Princess Cruises operation for the next two months.

The biggest risers were predominantly mining companies, including Evraz, Rio Tinto and BHP, as investors look for any safe havens to put their money.

Fallers also included TUI, JD Sports and PaddyPower Betfair owner Flutter was also down as football chiefs decided to suspend Premier League and other top-level fixtures until April 3.

The European Commission said on Friday it will release another one billion euros (£900 million) to help guarantee the loans of smaller businesses. It has also loosened the rules which govern how EU member are allowed to aid companies.

The US Federal reserve injected 1.5 trillion dollars into the financial system, making short-term loans available and buying bonds in an attempt to keep the markets afloat.

In the UK, the Financial Conduct Authority also announced a temporary ban on short-selling – or betting that a share price will fall – for Italian-listed businesses.

The decision comes after the Italian FTSEMIB fell an unprecedented 17% on Thursday, and bans are imposed on companies including Fiat Chrysler, Ferrari, De’Longhi and Juventus and Lazio football clubs.

Investors are fearful that with countries taking stricter measures to combat the pandemic, industries including travel, transport and leisure businesses could go bust.

Shopping centre owner Intu has already warned it faces bankruptcy and Cineworld said in a worst-case scenario it would be unable to pay its debts, as studios pull release dates and postpone filming.

Markets are also hoping for more news from the European Central Bank after a speech by its boss, Christine Lagarde, was met poorly – triggering some of Thursday’s biggest selling moments.

Commentators have criticised her decision to not repeat the words of her predecessor to do “whatever it takes” to protect the eurozone from a recession.

New lending measures were introduced but there was no interest rate cut.

Overnight, stock markets in the Asia-Pacific region saw major swings, with Japan’s Nikkei 225 down 4%, but Australia’s leading index, the S&P/ASX 200, closed the day up 4.4%.

Heavy falls in India’s Nifty 50 market led to the index being suspended for 45 minutes on Friday morning following a 10% drop.

PA