UK stocks recovered some of their recent losses today, with blue-chips leading the way.
The FTSE 100 index rose 57 points, or 1%, putting the 0.2% rise by the FTSE 250 in the shade.
The FTSE 250 was weighed down by adverse reaction to trading updates from food-on-the-go specialist Greggs (LON:GRG) and white-collar recruiter Michael Page (LON:MPI), though strong gains for Debenhams (LON:DEB) and Vedanta (LON:VED) more than offset the weakness of Greggs and Michael Page.
In the top echelon, mining stocks were sharply lower and were joined in the basement by oil giants BP (LON:BP.), which announced plans to lay off 4,000 jobs, and Royal Dutch Shell (LON:RDSB), which is facing a struggle to persuade institutional investors to back its monster takeover of BG (LON:BG.) as oil prices continue to tumble.
Tesco (LON:TSCO) was the top performer, as data from market research organisation Kantar Worldpanel revealed the supermarket lost market share over Christmas, but not as much as expected.
Tesco shares advanced 6.7%.
Among the small caps, KBC Advanced Technology (LON:KBC) shot up 48% as its much larger US software sector peer AspenTech made an agreed takeover bid.
ReNeuron (LON:RENE) climbed 7.7% to 3.5p after it published pre-clinical research that assessed the potential of exosomes created from its stem cell lines to treat diseases such as cancer.
Elsewhere in the pharmaceutical sector, Alliance Pharma (LON:APH) climbed 1.1% to 47p as it emerged that River and Mercantile Asset Management has taken a 5.12% stake.
MID-SESSION
FTSE100 was buoyed by retail stocks at lunch and investor sentiment seemed to be improving as the index climbed 1.6% higher.
Also helping was news from China where the Central bank has fixed the yuan higher in a bid to prevent the stock market going into free-fall, as has been seen in recent days.
One of the show stealers was Morrisons (LON:MRW) and Tesco (LON:TSCO), which was the second biggest gainer on FTSE100 adding 6.63% to stand at 155.1p following an upbeat trading statement from the fellow grocer and Kantar statistics.
Morrison's gave a surprise rise in like-for-like sales in the run-up to Christmas and said its recovery plan was on track. Shares added almost 9% to 165.9p.
Sainsbury's (LON:SBRY) won the Christmas battle however, with data showing that it was the only one of the big four to grow sales and market share over the Christmas trading period.
Its shares added 3.29% to 251.3p.
In clothing, Debenhams (LON:DEB) saw shares surge over 15% to 76.15p on upbeat Christmas trading results.
FTSE100 overall added over 93 points to stand at 5,965.
On the general mood, Joshua Mahony, analyst at spreadbetter IG Index, said: "There is a feeling that perhaps the selling pressure that has characterised stock markets last week may ease somewhat, as profit-taking among shorts and bargain hunting takes hold."
On the downside, miners were still feeling the pinch with Antofagasta (LON:ANTO) the biggest loser, shedding 0.59% to 385.40p.
In smaller fry, Wishbone Gold (LON:WSBN), the AIM listed gold exploration and acquisition company, rocketed over 62% to 0.37p as it revealed yesterday that it is in discussions regarding the potential acquisition of a complementary business.
Challenger Acquisitions (LON:CHAL) went 3.5% higher to 37p as it appointed the chief executive of the New York Wheel as one of two new independent directors of the company.
Canadian Overseas Petroleum (LON:COPL, CVE:XOP) in London added 6.67% to 2p as it revealed that Arthur Millholland, president and chief executive, has increased his shareholding in the company.
OPEN
Retailers gave FTSE100 an early boost, with one of the big supermarkets Morrisons (LON:MRW) providing a welcome turnaround story.
The FTSE250 firm gave a surprise rise in like-for-like sales in the run-up to Christmas and said its recovery plan was on track.
Shares added over 10% to change hands at 168.5p.
A rising tide buoys all boats, they say, and Tesco (LON:TSCO) was also up 5.57% to 153.55p to make it the Footsie's biggest gainer. Sainsbury's (LON:SBRY) added 3.16% to 251p.
Burberry (LON:BRBY), the high fashion brand, was up 3.32% to 1,120p.
Overall, FTSE100 gained 26 points to stand at 5,898, after finishing down 40 yesterday.
Miners were taking the brunt of the selling as woes over Chinese growth and the plunging price of oil took its toll.
The biggest loser was BHP Billiton (LON:BLT), down 3,58% to 613.3p but copper giant Antofagasta (LON:ANTO) and trader Glencore (LON:GLEN) were also among top five losers.
There were some laggards in the retail space though. Bread, pasty and cake seller Greggs (LON:GRG) eased almost 8% to 1,129p as the chain said growth had slowed in the fourth quarter.
In small caps, Challenger Acquisitions (LON:CHAL) nudged 1.4% higher to 36.25p as it appointed the chief executive of the New York Wheel as one of two new independent directors of the company.
Richard Marin is joining the board with John Le Poidevin, who is coming on board as chairman. He replaces Mark Gustafson, who exchanges the role of executive chairman for chief executive.
Also flying higher was budget airline Fastjet (LON:FAST), which added 2.6% to 69p after it revealed it had launched its service to Kenya with planes now flying from Dar es Salaam and Kilimanjaro in Tanzania to Nairobi, the Kenyan capital.
Savannah Resources (LON:SAV) was lifted 1.56% to 1.1625p as it completed its latest drill programme at Blocks 4 and 5 in Oman.
The junior drilled 16 holes, assays for nine of which have already been received and that intercepted good grades of copper, gold and silver.
Results from the other seven holes are expected by the end of the month.
PREVIEW
FTSE100 is called to start eleven points lower today as traders continue to worry about Chinese growth and the oil price continues its descent.
The price of the commodity is nearly 20% down since 2016 kicked off with US crude now down 2.52% to US$30.63 a barrel.
Meanwhile, Brent has fallen nearly 20 percent in January and is down 2% at US$33.34 a barrel at the time of writing.
Asian trading was not strong overnight. In Japan, after a market holiday on Monday, the Nikkei plunged 437 points, or 2.47% to 17,260.
The Shanghai Composite Index is barely changed - up one point at 3,020 after falling over 5% on Monday as traders feared the authorities were at a loss as to what to do about the turmoil.
Bernard Aw, at spreadbetter IG Index, said: "Nowadays, the performance of Chinese equities appeared to have a profound contagion on global markets, despite a still limited access to the onshore markets.
"Wall Street Journal suggested that the market influence belies a troubling possibility, which is that China may be fumbling its management of the country’s economy. In other words, it is not so much the actual fall in equities which matters, but how they are perceived by foreigners."
FTSE100 closed out 40 points lower at 5,872, while in New York the Dow Jones was up 53 at 16,399, the Nasdaq fell six points and the S&P500 added just two.
Today, focus in London will be on retailers’ trading statements after the key Christmas period, with Debenhams(LON:DEB) and Morrisons (LON:MRW) reporting.