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(Reuters) - British stocks ended higher on Tuesday, rebounding from a hefty selloff in the previous session, amid hopes that the U.S. might soften its stance on some of its aggressive import tariffs.
The blue-chip FTSE 100 rose 2.7%, its biggest daily jump since March 2022, recovering from its lowest close in more than a year in the previous session.
The domestically focused midcap index gained 3.3%, bouncing back after three consecutive sessions of losses.
The majority of stocks in the blue-chip index closed higher.
White House economic adviser Kevin Hassett said U.S. trade negotiators are prioritizing allies as they move forward on trade.
British finance minister Rachel Reeves said she would meet U.S. Treasury Secretary Scott Bessent "shortly" as part of broader talks over a new economic partnership that London hopes will reduce its tariff levy.
"With hints of negotiations in the air, relief has flooded through financial markets, with the FTSE 100 rebounding from a chunk of yesterday's losses", said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Aerospace and defence led sectoral gains, up 5.6%. Rolls-Royce and BAE Systems were among the top gainers in the FTSE 100, up 6.8% and 4.6%, respectively.
Precious metal mining stocks were up 3% after the price of gold rose back above $3,000 per ounce, as a weaker greenback and escalating U.S.-China trade tensions lifted demand for the safe-haven asset. [GOL/]
British 30-year government bond yields rose to their highest level in nearly three months, leading a similar move in U.S. and German debt.
Utilities, which are often traded as a bond proxy, gained 2.1%.
However, uncertainty lingered, as Beijing refused to bow to what it called "blackmail" after U.S. President Donald Trump threatened to ratchet up its tariffs to 104%.
Trump said he is waiting to hear from China before duties of more than 100% take effect on Wednesday, in a sign that he might be open to last-minute negotiations with the world's second-biggest economy.
Investors are looking ahead to the release of U.S. consumer price data on Thursday.
(Reporting by Ragini Mathur and Sanchayaita Roy in Bengaluru; Editing by Shilpi Majumdar and Paul Simao)
