Traders in London kicked off the new year with fireworks on Tuesday as the FTSE 100 soared high on the first day that markets opened.
The FTSE 100 briefly hit its highest point since the start of June, reaching 7,626 points during the morning, but gave back some of the gains throughout the afternoon.
When the markets closed in London the FTSE was at 7,554.09, a rise of 102.35 points or 1.4%.
Traders were in part celebrating the news that China continues to reopen after months of a zero Covid policy which hampered the economy, said Matthew Weller, head of research at City Index.
“There will undoubtedly be more suffering and setbacks to come, but markets are always forward-looking and based on the early evidence,” he said.
“China’s economy could be well on its way back to ‘normal’ in the first quarter of the year, raising global growth as a whole for the coming year.”
Investors are also encouraged by a recent spate of warm weather, with European weather stations measuring temperatures many degrees above normal averages.
It will hopefully allow Europe to burn less gas over coming weeks, and easing the shortage of energy that the continent has been worried about.
As a result, wholesale gas prices have dropped from their recent highs, although are still well above their historical averages.
“For months, traders have been concerned about natural gas shortages leading to an “energy crunch” in Europe amidst the ongoing Russia-Ukraine war, but after a relatively warm start to the winter, fears of a worst-case scenario were already fading,” Mr Weller said.
“And that was before the weather around the New Year shattered thousands of temperature records across the continent.”
In the US, traders were less positive, with the S&P 500 down 0.8% and the Dow Jones down 0.5% around the time that markets closed in Europe.
In Germany the Dax index rose 0.8% while Paris’s Cac 40 closed up 0.4%.
On currency markets the pound fell by around three-quarters of a per cent to a little under 1.20 dollars.
Despite dropping earlier in the day, shares in Cineworld closed up around 0.8%. The business denied reports that it was in talks with the owner of Odeon over a potential buyout.
AMC said that it had backed out of discussions with the listed UK cinema chain, one of the biggest in the world.
“Cineworld would like to clarify that neither it nor its advisers have participated in discussions with AMC Entertainment regarding the sale of any of its cinema assets,” it said.
Elsewhere Hotel Chocolat agreed a new joint venture in Japan, months after its old project in the country collapsed.
The deal with Tokyo-based Eat Creator Corporation will run 21 Hotel Chocolat-branded shops across the country. Hotel Chocolat will hold 20% and get royalties.
Shares closed up by 8%.
The biggest risers on the FTSE 100 were Rolls-Royce, up 5.71p to 98.91p, Ocado, up 31.8p to 648.6p, Persimmon, up 55.5p to 1272.5p, Barratt Developments, up 17.6p to 414.4p, and Prudential, up 49.5p to 1177p.
The biggest fallers on the FTSE 100 were Centrica, down 4.58p to 91.94p, SSE, down 48.5p to 1663.5p, CocaCola HBC, down 35p to 1938.5p, Beazley, down 12p to 668p, and Glencore, down 8p to 544.4p.