European markets have made nervous gains despite lingering fears that the world economy is heading back towards recession.
The FTSE 100 Index in London gained 1.5% as traders decided that shares represented good value after the index fell 5% last week. The CAC 40 in France and the DAX in Germany also pushed higher.
However, markets remain jittery after last week’s poor economic data from the US and eurozone created fresh panic about the prospect of a global recession.
The glut of bad news caused London’s blue chip index to suffer its biggest daily loss in nearly three years on Thursday, wiping £62.3 billion from the value of the UK’s 100 biggest companies.
In another session of volatile trading on Monday, London’s leading shares index slid nearly 1% at the start of the session – taking it below the 5000 mark – but it bounced back shortly afterwards.
Gold continued to hit new record highs, rising to 1,895 US dollars (£1,151) per ounce, because it is seen as a safe haven amid the market turmoil.
Oil prices fell more than 2%, on speculation that Colonel Muammar Gaddafi’s 40-year rule in Libya is on the edge of collapse, which traders think could reopen supplies from the war-torn country.
The gain for European markets was despite the Dow Jones Industrial Average in the US falling more than 1.5% on Friday.
Markets have swung wildly in recent weeks as figures revealed the pace of economic growth in countries such as the US and Germany has slowed, leading to fears that the global recovery is running out of steam.
Fears about the strength of the world’s biggest economy were heightened by a rise in the number of jobless claimants and weak manufacturing and home sales figures. There are also unresolved worries about the eurozone debt crisis after French president Nicolas Sarkozy and German chancellor Angela Merkel failed to back eurozone bonds to fix the current problems at an emergency meeting.
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