In banking Barclays and Lloyds Banking Group were up six per cent and five per cent respectively and Royal Bank of Scotland was up four per cent.
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EasyJet shares also plummeted – by 19 percent – following a statement from the airline saying Brexit would contribute to a fall in revenues of up to £28 million (about US$37 million).
“The overnight indexed swap market is now pricing 38 basis points of cuts from the BoE over one-year time horizon”, said Petr Krpata, currency strategist at ING, adding investors were also concerned about Britain’s large current account deficit, pegged at 7 percent of GDP.
Markets in Europe were also look more healthy as they opened today after a number of countries, in particular Italy, took a pummelling. No-frills airline EasyJet topped the FTSE 100 fallers board in London, tanking more than 15 percent to 1,116 pence after issuing a grim profits warning.
It recovered from a low of $1.3356 struck in Asia on Monday after British Chancellor George Osborne sought to assure markets that he was staying on and that the economy was in good shape. The FTSE 250 index, which mostly contains companies that are more UK-focused, was down 4.5 per cent on Monday after sliding 7 per cent on Friday.
The return on United Kingdom government bonds – known as the gilt yield – fell to its lowest level ever on Monday.
But it is hoped the pound’s slide will boost exports, while government borrowing costs hit a record low – showing investors have faith in the UK.
‘Stocks in the former are being priced as recession risks (banks, property, airlines), whereas global stocks are benefiting from much lower sterling.
He also indicated there would be no immediate emergency Budget.
Market commentators, however, caution that the gains are likely to only be a temporary recovery – a dead cat bounce – due to the uncertainty over how the result will impact the United Kingdom economy.
It was the first such operation since the referendum vote.
In the short term, Lord King said he expected the leave decision to affect investment from foreign firms into the United Kingdom, but in the long term he said it was likely that the impact would be much smaller than either side expected.
The gold price often rises in times of uncertainty as it is viewed as a haven asset.
In corporate news, defence and aerospace group Rolls-Royce was on the front foot after saying the UK’s decision to leave the European Union would not have an immediate impact on day-to-day business, adding that it remains committed to the United Kingdom “where we are headquartered, directly employ over 23,000 talented and committed workers and where we carry out a significant majority of our research and development”.
But despite that, there had been “no panic” and the markets were “under control”.
However experts also warned that even as calm descends on financial markets it is too early to sound the all-clear for Britain’s battered financial institutions.
The gains followed on from most Asian stock markets closing slightly higher overnight.
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Globally the vote wiped $2.08 trillion off equity markets on Friday, the biggest daily loss ever. Traders will be watching the UK’s financial position closely over the coming months.
