Global equity markets calmed on Friday at the end of a volatile week which has been dominated by the Ukraine crisis.
Risk-on sentiment returned on hopes of talks between Russia and Ukraine, and as the West slapped a raft of sanctions on Russia, but avoided targeting its energy sector.
‘In terms of important questions for the week ahead, one will be whether those sanctions get any tougher, such as whether Russia would lose access to the SWIFT payments system,’ said Deutsche Bank.
The FTSE 100 index closed up 282.08 points, or 3.9%, at 7,489.46. London's blue-chip index ended the week overall down 0.3%.
The FTSE 250 ended up 654.87 points, or 3.2%, at 20,906.75, meaning the mid-cap index has shed 2.1% over the course of the week, and the AIM All-Share closed up 22.52 points, or 2.2%, at 1,030.30, and has fallen 2.8% since the week began.
The Cboe UK 100 ended up 3.8% at 744.71, the Cboe UK 250 closed up 2.8% at 18,607.12, and the Cboe Small Companies ended up 0.4% at 14,869.91.
Ukrainian forces fought off Russian troops in the capital Kyiv on Friday on the second day of a conflict that has claimed dozens of lives, as Russian President Vladimir Putin called on the Ukrainian army to remove the country's leadership.
Small arms fire and explosions were heard in the city's northern district of Obolonsky as what appeared to be an advance party of Russia's invasion force left a trail of destruction.
Putin defied Western warnings to unleash a full-scale invasion on Thursday that has displaced at least 100,000 people and prompted the EU to adopt personal sanctions against him.
Russian Foreign Minister Sergei Lavrov said Moscow was ready to talk but only if Ukraine's armed forces ‘lay down their arms’, adding that ‘nobody intends to occupy Ukraine’. Russia has demanded that Ukraine to drop its ambition to join NATO and has called for the Western military alliance to scale back its presence in Eastern Europe.
Markets in mainland Europe also staged a strong rebound on Friday, though gains modestly lagged London, with worries continuing to swirl over the economic fallout of the Ukraine crisis on the bloc.
The CAC 40 in Paris ended up 3.6%, while the DAX 40 in Frankfurt ended up 3.7%.
Stocks in New York were looking to extend Thursday's gains, with the Dow Jones up 1.8% in mid-morning trade on Friday, the S&P 500 up 1.6% and the tech-heavy Nasdaq Composite up 0.9%.
In the FTSE 100, Russia-exposed firms rebounded along with Friday's broader risk-on mood. Russian steelmaker Evraz jumped 20%, shares also lifted by a sharp jump in profit in 2021 to $4.18 billion, while Polymetal International rose 17%. However, the stocks remain 27% and 32% lower respectively since the start of the week.
Central and eastern Europe-focused airline Wizz Air rebounded 12% and iron ore pellet producer Ferrexpo, which on Friday said it has issued force majeure notices to customers following the suspension of export activities at the port of Pivdennyi in southwest Ukraine, rose 7.5%.
JPMorgan Russia Securities PLC, a Russia-focused investor, rose 12%. The RTS Index in Moscow jumped 26% on Friday after Thursday's bruising 38% crash.
Gold prices eased as risk appetite improved. The safe haven metal was quoted at $1,887.00 an ounce at the London equities close Friday, down from $1,924.11 at the close on Thursday.
Fellow safe haven, the Japanese yen, also eased, with the dollar trading at JP¥115.61 compared to JP¥115.43 late Thursday.
Also slipping were oil prices. Brent oil was quoted at $97.16 a barrel at the London equities close Friday, tumbling from $104.19 late Thursday, as sanctions imposed on Russia went short of targeting energy exports.
‘The latest Western sanctions on Russia will hit its economy hard through tighter financial conditions and reduced trade, and might plausibly hit GDP by 1-2%-pts. But sanctions stopped short of the more damaging scenario - both for Russia and Europe - in which Russia's energy exports are targeted,’ said Capital Economics.
The pound and euro saw some respite as investors gingerly bought back into riskier assets. Even data showing the US Federal Reserve's preferred inflation measure rose 5.2% annually in January, the fastest rise since 1983, was unable to give the dollar a further boost.
The pound was quoted at $1.3409 at the London equities close Friday, up compared to $1.3353 at the close on Thursday but still well below the $1.3580 level it ended last week at.
The euro stood at $1.1258 at the European equities close Friday, rising against $1.1148 at the same time on Thursday.
Back in London, Pearson's share buyback was also helping to boost the FTSE 100, with the stock rallying 12%.
The educational publisher posted pretax profit of £157 million, down from £354 million in 2020, on total sales that rose marginally to £3.43 billion from £3.40 billion. However, adjusted operating profit for 2021 rose 23% to £385 million, up 33% at constant exchange rates. This was in line with raised guidance given by the firm in January.
Pearson declared a total dividend of 20.5 pence, up 5.1% from 19.5p in 2020. In addition, the FTSE 100-listed firm said it intends to start a share buyback of £350 million in 2022.
International Consolidated Airlines shares rose 4.8% after the British Airways parent reported a narrowed loss for 2021 through a rebound in bookings, fostering confidence in the group flying 85% of its pre-virus capacity in 2022.
For the year, IAG posted a pretax loss of €3.51 billion, narrowed considerably from €7.83 billion in 2020. This was on revenue which grew 8.3% year-on-year to €8.46 billion from €7.81 billion.
‘Prior to Omicron, long-haul traffic had seen the highest booking activity in October and November at over 80% of 2019 levels. This was driven by the re-opening of the North Atlantic corridor and the strength of long-haul leisure markets and travellers visiting families and friends,’ said Chief Executive Officer Luis Gallego.
On AIM, Eurasia Mining surged 66% - though shares remain 29% lower since the start of the week - after saying that sanctions imposed on Russia due to its invasion of Ukraine would not impact its operations or keep it from executing its strategy. Eurasia highlighted that it has no bank accounts or relationships with any Russian state-owned banks.
The UK corporate calendar on Monday has results from distribution firm Bunzl and a trading statement from Primark owner Associated British Foods.
Monday's economic calendar has UK Nationwide house prices at 0700 GMT and Irish retail sales at 1100 GMT.
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