Pound Rebounds Despite Fresh Recession Fears

The pound has enjoyed a late afternoon surge despite fresh figures indicating that the UK is in the middle of a recession.

Sterling jumped by more than 1.25% to top 1.2 US dollars by the time European markets had closed, for the first time since mid-august.

And the pound was also making solid gains against the euro, rising 0.7% to 1.1616.

However, the influential PMI survey showed that the UK’S private sector economy is set to shrink again this month, indicating the country is in the middle of a recession and the downturn will worsen.

In the US, business activity contracted for the fifth consecutive month as Americans face increasing borrowing costs.

But the FTSE 100 managed to stay in the green after reaching a two-month high on Tuesday, and grazing the 7,500 mark during the highs of the day.

It closed 12.4 points higher, or 0.17%, at 7,465.24.

Meanwhile, Germany’s top index, the Dax, was in the green by the skin of its teeth, closing just 0.04% higher. The French Cac was more firmly up, by 0.32%.

In the US, the S&P 500 rose in early trading, up by a mild 0.13% when European markets closed. The Dow Jones was down by about 0.08%.

Brent crude oil slid by 4.29% to 84.57 dollars per barrel. In company news, shares in Reach initially dropped sharply after a potential bidder said it was no longer interested in a takeover offer but shares later recovered and ended the day up 3.3%.

National World, the company behind the Scotsman and Yorkshire Post, said it would not bid for Reach, which owns the Mirror and Express among others.

Meanwhile, retailer Pets at Home said that its profits had dropped by 9.3% before tax in the first six months of the financial year to a little under £60 million. Shares dropped 4.7% on the news.

The business said that it had invested heavily in its digital channels, increasing costs significantly.

Halfords saw its revenue rise by 10% in the six months to the end of September but pre-tax profit halved to #29 million as it was once more forced to pay business rates as usual.

The retailer said that its sales of bikes had plummeted by more than 12% - largely as a result of high sales the year before. Shares dropped by 6.5% on the news.

The biggest risers on the FTSE 100 were Hargreaves Lansdown, up 36.6p to 845p, Ocado, up 26.4p to 657.6p, Frasers, up 34p to 886p, Intermediate Capital Group, up 45p to 1,202p, and Rolls-royce, up 3.12p to 88.41p.

The biggest fallers on the FTSE 100 were Harbour Energy, down 8.3p to 312.3p,

GSK, down 25.6p to 1,384p, Scottish Mortgage Investment Trust, down 9p to 761.8p, Shell, down 26p to 2,356.5p, and Intertek, down 42p to 3,860p.