European stock markets rally as bond yields fall

London’s top index has surged and global stock markets rallied as US officials hinted that interest rates could be nearing a peak.

The FTSE 100 surged by nearly 2% during the day on Tuesday, with miners and gambling firms among the stocks seeing big gains.

It gained 136 points, moving 1.82% higher, to close at 7,628.21.

The buoyant mood came as yields on UK bonds, or government debt, eased after recently hitting new highs amid concerns over interest rates staying higher for longer.

Treasury yields – the interest paid on US government bonds – also fell back amid remarks from officials in the Federal Reserve indicating that rates may not need to be raised further.

Meanwhile, the International Monetary Fund (IMF) marginally upgraded its growth prediction for UK gross domestic product (GDP) this year to 0.5% from 0.4%, but downgraded its forecast for GDP growth next year.

Other major European stock markets were given a boost, with Germany’s Dax jumping 1.95% and France’s Cac 40 closing 2.01% higher.

It was a strong start to trading in the US with the S&P 500 up 1% and Dow Jones up 0.75% by the time European markets closed.

“Dovish Fed comments that the recent run-up in yields might reduce the need for further rate hikes lowered expectations of another rate rise and led to a stock market rally,” said Axel Rudolph, senior market analyst at IG.

He added: “Due to colder weather forecasts and suppliers worrying about increased demand the natural gas price shot up to a six-month high in Europe and a 10-month high in the US.”

UK gas prices jumped by more than 12% on Tuesday afternoon, reaching the highest level for around two weeks.

Meanwhile, the price of Brent crude oil fell by 0.92% to 87.34 dollars per barrel.

The pound jumped by about 0.4% against the US dollar to 1.229, and was flat against the euro to 1.157.

In company news, shares in Greencore soared by more than a fifth after the UK’s largest sandwich maker upgraded its profit forecast for the year and said it expects revenues to have risen by a 10th.

The business – which supplies sandwiches, salads and sushi to all major British supermarkets – said it was pleased with its financial performance over the second half of the year against inflation and a challenging consumer environment.

Greencore’s share price surged following the update and closed 22.2% higher.

Elsewhere, shares in Currys also enjoyed a boost after the electronics retailer revealed that it has been approached by several potential buyers for its Greek and Cypriot division.

The company said it received bids after putting the unit up for review and June, and it was in the process of assessing the offers. Its share price closed 5% higher.

The biggest risers on the FTSE 100 were Ocado, up 37.6p to 600p, Anglo American, up 121p to 2,269.5p, Flutter Entertainment, up 670p to 1,3640p, Antofagasta, up 62p to 1,445p, and Entain, up 40.6p to 962p.

The only faller on the FTSE 100 was Spirax-Sarco Engineering.