UK's Markets Continue Post-Referendum Recovery

The UK's markets have continued to recover from the Brexit vote, with the FTSE 100 powering to its highest level for nearly a year.

The index's upward movement came as Bank of England governor Mark Carney signalled that interest rates could be lowered even further than their record 0.5% benchmark.

The FTSE 100 closed up 2.3% or 144.3 points to 6504.3, its highest level since last August and the third day of big gains for the financial markets.

The pound, however, did not like the news as much, tumbling close to the 31-year low against the US dollar that it saw just after the Brexit vote.

It fell just over a cent to 1.33 US dollars and a cent to 1.20 euros.

The FTSE 250 Index, a better measure of UK sentiment, was also sharply higher with a 1.7% rise, although it is still below its pre-Brexit level.

Tony Cross, market analyst at Trustnet Direct, said: "As if the market's behaviour in the wake of the Brexit referendum couldn't get any stranger, the FTSE 100 has now pushed out to above 6,500 for the first time since before the Chinese equity market shock last August."

But he said the twists and turns in the Conservative Party leadership contest was adding to the pound's woes.

"This has added to the unsettling of the pound again today and while this is good for stocks in the short term, the concern is that these exit negotiations need to be very carefully managed," he added.

Capital Economics economist Julian Jessop said "several plausible reasons" were behind why markets had recovered after the Brexit decision, some of which may be temporary.

"More positively, though, we think that the markets are right to recognise that Brexit, and especially some form of Brexit-lite, would not be as damaging as so many were arguing ahead of the referendum," he said in a note.