London's FTSE 100 rebounded on Tuesday from a one-month low hit a day earlier, with commodity-linked energy and mining stocks leading the gains, while Unilever (LON:ULVR) slipped on plans to slash about 1,500 management positions.
Concerns of a military conflict in Ukraine, coupled with risks in the Middle East, have raised concerns about possible oil supply disruptions, pushing crude futures higher. [O/R]
Market participants appeared to be on the sideline ahead of the outcome of the Federal Reserve policy meeting on Wednesday, expecting a hawkish stance from policymakers.
Expectations are also high the Bank of England will increase rates for the second time in less than two months at its policy meeting next week. [BOEWATCH]
"The UK equities, though have taken cues from the strong rebound in the U.S. markets that after, falling in a similar quantum, bounced back after NATO reportedly put forces on standby," said Kunal Sawhney, chief executive of research firm Kalkine.
The FTSE 100 has outperformed its peers in developed markets this year, supported by its attractive valuations and gains in heavyweight energy and banking shares.
UK markets offer a good hedge in the event of a multiple compression driven by rising rates, with equities offering the best valuation cushions and the highest dividend yields among key markets, analysts at JP Morgan said in a note.
The domestically focussed mid-cap index rose 0.8%, with travel and leisure stocks leading the gains.
Pub operator Marston's gained 1.2% even after its like-for-like sales for the 16 weeks ended Jan. 12 came in 3.9% lower than pre-pandemic levels.
Unilever slipped 0.3% after the consumer products maker unveiled plans to cut about 1,500 management jobs.