Shares in Europe creep higher after torrid trading on Thursday

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European markets have nudged higher after Thursday’s dramatic falls, which were prompted by grim economic and health news from the US.

By mid-morning, London’s FTSE 100 share index was up more than 1% at 6,147, while France’s Cac index was up almost 2%.

However, markets remain volatile as investors struggle to assess the economic damage of coronavirus.

On Thursday, US markets slumped by 7% and UK and Europe’s by about 4%.

The sell-off was prompted by a bleak view of the US economy from its central bank, the Federal Reserve, and reports of rising coronavirus cases from some US states.

Joshua Mahony, an analyst at IG, said: «We appear to be shifting from a phase where everyone looks towards the reopening as a cause for optimism, to one where we begin to refocus on Covid case numbers with trepidation.

«We are certainly likely to see volatility and market sensitivity pick up in the coming weeks as [new] Covid cases roll in.»

Earlier, Asian markets reflected the downbeat trend overnight but were far less affected. IG said this highlighted the feeling that a potential second wave of coronavirus was more likely in the US or Europe.

Japan’s Nikkei ended down 0.75% at 22,305, while Hong Kong’s Hang Seng indexfell 0.7% to 24,301.

Thursday’s falls on Wall Street followed a weeks-long rally that had helped shares recover some ground from the lows seen in March.

This rally was triggered by hopes that the US economy would rebound as authorities loosened restrictions put in place to try to slow the spread of the virus.

Last week’s surprise report showing US employers had restarted hiring in May helped to push the tech-heavy Nasdaq share index to new highs.

But the recovery remains tentative. On Thursday, the US Labor Department reported that another 1.5 million people had filed new unemployment claims last week. More than 30 million continue to collect the benefits, it said.

US Federal Reserve policymakers said on Wednesday that the unemployment rate could remain above 9% at the end of the year – close to the worst level of the financial crisis,

Several US states that have moved to ease lockdown restrictions, including Arizona and South Carolina, have seen an uptick in Covid-19 cases in recent days.