The FTSE 100 posted its first strong performance in more than a week as a mix of Russia’s recent escalation in its war with Ukraine and reports of a stamp duty cut sent some index members higher.
At the end of the day, defense manufacturer BAE Systems was one of the top performers on the FTSE.
It came after Russian President Vladimir Putin announced he would mobilize 300,000 reservists to try to reverse a war that has turned against him in recent weeks.
Experts question how much impact the thousands of undertrained troops will have, and whether Russia can even properly equip them.
We have seen gains in defense stocks following Putin’s threats this morning, with BAE Systems near the top of the FTSE 100 while Chemring and QinetiQ are also higherCMC Markets analyst Michael Hewson
But the possibility of an escalation seemed to be clearly pushing investors toward defense companies, said Michael Hewson, an analyst at CMC Markets.
“We’ve seen… gains in defense stocks following Putin’s threats this morning, with BAE Systems near the top of the FTSE 100, while Chemring and QinetiQ are also higher,” he said.
Mr Hewson added: “Home builders have received reports that we could see a stamp duty cut later this week when the mini-budget is announced, with Persimmon, Taylor Wimpey and Barratt Developments recovering slightly after yesterday’s sharp losses.
“Today’s recovery is still modest compared to the losses we’ve already seen this year and this week.
“Ultimately, the devil will be in the details, but even if it does happen, the other side of that is that with interest rates rising and the cost of living rising, there’s unlikely to be a reversal.”
At the end of the day, the FTSE 100 had gained 44.98 points, up 0.6%, leaving it at 7,237.64.
In Europe, the German Dax closed up 0.8% and the French Cac 40 rose 0.9%.
On Wall Street, the S&P 400 and the Dow Jones each gained around half a percent shortly after the market closed in Europe.
Sterling was flat against both the euro and the dollar, at $1.133 against the pound and 1.147 euros.
In company news, retailer JD Sports will pay £5.5million to its former boss Peter Cowgill, who resigned in May.
The former chief executive helped land the company with a £4.3million fine for sharing confidential information with Footasylum during a merger attempt that was eventually blocked.
JD said it had reached an agreement with Mr Cowgill on the terms of his departure. Shares fell 0.5%.
French company Schneider Electric will acquire software company Aveva in a deal that will value the company at £9.5 billion.
Shares in the company rose 1.8% on Wednesday to just above the £31 offer price. Schneider already owns around 60% of the shares in the FTSE 100 company.
Aveva has over 6,400 employees.
The biggest climbers in the FTSE 100 were Hargreaves Lansdown up 49.2p to 892.8p, Persimmon up 62.5p to 1,399.5p, BAE Systems up 31.6p to 803 .4p, Schroders up 17p to 444.9p and Halma up 70p to 2,105p.
The biggest losers on the FTSE 100 were Ocado down 31.4p to 575p, Intercontinental Hotels Group down 156p to 4,489p, IAG down 4p to 104.8p, Whitbread down from 60p to 2,560p and Rolls-Royce down 2p to 74.32p.