The FTSE 100 closed sharply higher on Thursday, climbing 115.49 points, or 1.1%, to finish at 10,840.35, outperforming its European counterparts.
The index benefited from relatively low exposure to technology stocks, which remained volatile amid mounting concerns over artificial intelligence spending and Chinese competition.
Kathleen Brooks, research director at XTB, said the AI trade was experiencing a “major shake-out”, with strong earnings beats being ignored as investors fret about inflation and rising Fed rate hike bets.
Brooks added that when the “AI trade sells off, the UK is the harbour in the storm”, underlining London’s defensive appeal during periods of tech-driven turbulence.
The FTSE 250 rose 64.00 points, or 0.3%, to 24,424.77, while the AIM All-Share slipped 2.82 points, or 0.4%, to 765.09, reflecting a more cautious mood among smaller-cap investors.
Across Europe, the CAC 40 in Paris gained 0.8% and Frankfurt’s DAX 40 added 0.3%, with semiconductor firm Infineon losing 4.8% and Siemens Energy shedding 2.6% amid the tech selloff.
On Wall Street, the Dow Jones Industrial Average was up 1.0% at London’s close, while the S&P 500 edged up just 0.1% and the Nasdaq Composite fell 0.4%.
Chip makers Nvidia, Advanced Micro Devices, and Broadcom fell 2.2%, 4.4%, and 1.9% respectively, reflecting broader discomfort with tech valuations and AI infrastructure spending.
Dan Coatsworth, head of markets at AJ Bell, said: “Tech investors are getting uncomfortable with the amount of debt being used to fund the AI build-out.”
Coatsworth added: “There is a growing fear that big names in the tech space are running too fast, and they’re primed to trip up. Reports about Anthropic’s third-quarter revenue suggest it isn’t growing as fast as expected, which added to fears that the AI euphoria might be hard to sustain.”
The Financial Times reported that Anthropic told investors its third-quarter revenue rose nearly 50% to 16.8 billion dollars, up from 11.5 billion dollars in the second quarter, though growth slowed sharply from the prior period.
Bond markets provided some relief, with the yield on the US 10-year Treasury falling to 5.10% from 5.26% the previous day, while the 30-year yield dropped to 5.42% from 5.57%.
David Morrison, analyst at Trade Nation, said comments from Federal Reserve vice chairwoman for supervision Michelle Bowman and San Francisco Fed president Mary Daly appeared to calm markets, reducing pressure for an imminent rate rise.
Sterling strengthened to 1.3254 dollars from 1.3152 dollars, while the euro firmed to 1.1204 dollars from 1.1121 dollars, as currency markets responded positively to easing bond tensions.
UK economic data added to the optimism, with gross domestic product rising 0.1% month-on-month in August, beating expectations for a 0.1% decline, according to the Office for National Statistics.
Rob Wood at Pantheon Macroeconomics said: “We think GDP is on track to grow by a somewhat hard to believe 0.7% quarter-to-quarter in Q3, above the MPC’s latest forecast of 0.4%, and far above its expectation from just a couple of months ago of 0.1%.”
Wood cautioned that the October budget and rising energy costs remained short-term risks but said a “beige” Budget from the chancellor should limit any growth damage compared to last year.
Credit checker Experian led FTSE 100 gainers, rising 5.9%, while accountancy software provider Sage climbed 5.6% and telecoms firm BT advanced 4.3% to 206.9p.
JD Sports Fashion rose 4.3% as management hosted analysts in Orlando, focusing discussions on plans to drive growth and profitability within the US sporting goods market.
Computacenter fell 5.6% to lead the index’s decliners, while Antofagasta dropped 4.1% after reporting weaker-than-expected third-quarter copper output and disappointing 2027 production guidance of 630,000 to 690,000 tonnes.
JPMorgan analyst Patrick Jones said: “Given the weaker than expected 2027 copper output guidance, we expect 2027 consensus Ebitda could fall by mid single digits.”
On the FTSE 250, THG surged 16% after nudging up its 2026 earnings guidance and reporting easing whey prices that should support margins, while Dunelm jumped 7.9% after backing guidance and reporting improved sales momentum.
Gold rose to 4,152.39 dollars an ounce from 4,089.77 dollars, and Brent crude climbed to 106.33 dollars a barrel, adding to a broadly positive tone across commodity markets on the day.