The FTSE 100 surged to a two-year high yesterday, before slipping slightly to finish the day up 76.35 points at 7,643.42.
The UK's blue-chip index joined a rally in global stock markets as investors cheered strong earnings while setting aside concerns about rising interest rates.
Chris Beauchamp, chief market analyst at online trading platform IG, told Reuters: "It has been a day of solid gains for equity markets, which continue to put the volatility of January behind them.
"Stocks of all types and sectors have made headway - a fact underlined by the inflows to equity markets in recent weeks, which has shown that investors are still content to buy the dip."
Value-oriented sectors including miners, energy and banking that were hit during the pandemic have been picked up by investors recently, allowing the FTSE 100 index to outperform the wider-European STOXX 600 so far this year.
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Meanwhile, the owner of British Airways is at risk of a challenge from France and Germany under legacy Brussels rules that would force it to break up, reports the Telegraph.
IAG, the FTSE 100 group whose airlines also include Aer Lingus and Spain's Iberia, could be forced to spin off BA because of European Union ownership rules, according to HSBC.
These regulations require airlines which operate flights between countries in the bloc to be "owned and controlled" from member states.
The rules were suspended after the UK left the EU, with both sides agreeing to talks over a new post-Brexit regime, but 13 months of negotiations have yet to yield a resolution.
Andrew Lobbenberg, an analyst at HSBC, said that, although Spain, Ireland and Hungary would support a relaxation of the rules, Germany and France will likely push for them to be re-introduced as a means for their airlines to gain a commercial advantage over BA for their own carriers, Lufthansa and Air France-KLM.
Different airlines have formed different conclusions about the precise definition of "owned and controlled". Many define it as having more than 50% of shareholders from the EU.
IAG, however, has argued that its group board structure, based in Madrid, satisfies the definition of the Brussels regulations.
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The FTSE 100
The FTSE 100 was at 7640 points shortly after opening this morning, while the March contract for Brent crude was almost flat at $91.56 a barrel.
Companies reporting today
- Finals: AstraZeneca, Beazley, RELX, Unilever
- Interims: Redrow
- Trading update: Watches of Switzerland
- AGM: EasyJet