London stocks gain on stimulus, recovery hopes

UK shares climbed on Tuesday as hopes of fresh government stimulus to blunt the economic impact of the coronavirus crisis added to optimism about a faster recovery with the easing of a nationwide lockdown.

The blue-chip FTSE 100 was up 0.7% as a report said finance minister Rishi Sunak was considering national insurance holidays for companies as part of a stimulus package to be announced in July. The mid-cap FTSE 250 added 0.8%, hitting its highest in nearly three months, although a broader rally was capped by growing Sino-U.S. friction and President Donald Trump's vow to use the military to end violent protests in American cities.

Greeting card retailer Card Factory signaled it would reopen about 10% of its stores from June 15, but its shares slipped 0.6% as it warned the business would suffer from social distancing. Market sentiment is being boosted by "a raft of companies making headway in getting back to normality and that's going to be the common theme unless there's a spike in new cases or governments rethink the reopening policy," said David Madden, an analyst at CMC Markets.

The domestically focussed FTSE 250 has recovered about 40% from its March lows as investors looked past dire economic figures. Data on Tuesday showed Britain's house prices crashed in May, but there were early signs of activity picking up. The UK travel index rose 1.6% as a report said the government was aiming to replace coronavirus quarantine for people arriving at airports by the end of June, with so-called air bridges being considered an option.

Mediclinic International Plc, the owner of a chain of private hospitals in southern Africa, the Middle East, and Switzerland, jumped 6.2% to the top of the FTSE 250 even as it reported an annual loss.