London stocks climbed on Wednesday after the Bank of England joined other major central banks in cutting interest rates to buffer the economy from the fast-spreading coronavirus.
The central bank cut rates by 50 basis points to 0.25%, following a similar move from the U.S. Federal Reserve last week and said lenders in the country could tap special capital reserves to keep lending to businesses and households.
“This is the type of policy co-ordination that the market was actually looking for,” said Stefan Koopman, senior market economist at RaboResearch.
“We have a combination of lower interest rates, credit easing measures and most likely a ramp up in fiscal spending, which will be announced later today.”
The FTSE 100 .FTSE gained 1%, recovering from a four-day slump fuelled by concerns about the fast-spreading virus and a rout in oil markets.
The central bank’s move came ahead of the unveiling of the first budget of Prime Minister Boris Johnson’s government at 1230 GMT, and the new Finance Minister Rishi Sunak is expected to pledge billions of pounds to fight the fall-out from the coronavirus.
On Tuesday, Junior Health Minister Nadine Dorries tested positive for coronavirus, which has so far infected 373 people and killed six in Britain.
Despite Wednesday’s gains, the FTSE 100 is still down more than 20% from its January peak as the outbreak takes a huge toll on the travel industry and disrupts business operations.