FTSE posts biggest rise in six weeks, as confidence in economic outlook rebounds

On the same day that European bourses rose sharply on robust corporate updates and hopes of more stimulus from the European Central Bank, a closely-followed survey of global investors revealed confidence in the world’s economic outlook had rebounded from three-year lows, reports The Telegraph.

The proportion of portfolio managers who said they expected the Federal Reserve to raise interest rates in December jumped to 81pc from 47 per cent in October, Bank of America Merrill Lynch found, after polling 201 investors managing $576bn in assets earlier this month.

Worries about a slowdown in China abated somewhat after growth expectations for the world’s second largest economy touched 15-month highs, with only 4 per cent of investors surveyed now anticipating a weaker reading in the next 12 months, compared with 22 per cent in October.

The outlook for Europe is also positive, BoA said. Growth prospects in the region jumped by the most in 10 months, after 54 per cent of those polled said they expect the European economy to strengthen by 54 per cent, up from 25 per cent last month.

Even sentiment towards European stocks moved toward record highs, as 58 per cent of global fund managers said they are overweight on eurozone equities.

Manish Kabra, of BoA, said: “While European equities are loved by global investors and the European Central Bank has created some excitement about growth, sector positioning shows local asset managers are lacking conviction and hugging their benchmarks.”

Meanwhile, in London, the FTSE 100 also enjoyed a stellar performance, advancing 122.38 points, or 1.99pc, to 6,268.76 – its biggest one day jump in six weeks.

Chris Beauchamp, market analyst of IG, said: “Dip buyers continue to make hay in UK and European markets, giddily buying up almost everything in sight. This continues the theme of Monday’s session, when a big gap down for major indices brought out the optimist in everyone.”

Defence stocks were among the top gainers for a second consecutive trading session as France intensified its military response to the attacks in Paris last Friday. Shares in BAE Systems advanced 9.1p to 473.8p, while Rolls-Royce rose 27p to 555p, despite two cautious broker notes warning on the stock.

Deutsche Bank slashed its rating to sell in response to Rolls’ profit warning last week, which was triggered by a weakness in its aerospace and marine businesses. The bank said no near-term free cash flow is likely, as valuing the engine maker with “any accuracy remains difficult”.