London - Britain's benchmark equity index bounced back on Friday after the Bank of Japan's decision to adopt negative interest rates to boost its economy lifted world stock markets.
The Bank of Japan unexpectedly cut a benchmark interest rate below zero on Friday, stunning investors with another bold move to revive the world's third largest economy as volatile markets and slowing global growth threaten its efforts to beat deflation.
The blue-chip FTSE 100 index, which had fallen around 1 percent on Thursday, stood 1 percent higher at 5,992.16 points, tracking similar gains on other European stock markets.
“The Bank of Japan has managed to temporarily ease some of the macroeconomic tensions that have plagued the start to 2016,” said Spreadex analyst Connor Campbell.
Traders added that the Bank of Japan's move would put pressure on the US Federal Reserve to adopt a cautious stance over any future interest rate rises in the United States.
It could also prompt the European Central Bank (ECB) to undertake similar measures in March and reinforce the likelihood that the Bank of England would keep interest rates at a record low.
“I'd be looking for the FTSE to pick up a little bit from here and rise into the 6,100-6,200 point range,” said Richard Griffiths, associate director at Berkeley Futures.
The FTSE is still down around 4 percent since the start of 2016 and 16 percent below a record high of 7,122.74 points reached last April, after concerns about a slowdown in China - the world's second biggest economy - hit world markets.
REUTERS