THE doom and gloom that swept the markets on Tuesday after the US added 28 new Chinese businesses to its trade blacklist was replaced on Wednesday with calm.
The FTSE 100 closed the day up 23.35 points at 7,166.50 following reports that a Chinese official said Beijing remained open to a partial trade deal when the two countries meet on Thursday.
Trade talks between the two countries have been strained, and traders have struggled to keep up with the endless mixed messages emerging from the White House over its stance on China.
Fiona Cincotta, markets analyst at City Index, said: "This would not be the broad trade agreement that could put an end to the trade dispute; optimism for such a deal is running low. However, the markets would accept a limited deal as a significant improvement from the current situation.
"But let's not forget we have been here many times before, where the markets are optimistic of progress only to be disappointed."
European markets also reacted positively to the news, with the German Dax closing up 1.04% and the French Cac up 0.78%.
The pound spent the day barely moving - down 0.08% against the dollar at 1.22075 and down 0.26% against the euro at 1.1123.
Traders appeared unconcerned by the latest shift in UK political sentiment towards a no-deal Brexit, still remaining optimistic that an extension will occur. Previously, any shift to a hardening Brexit stance has led to a fall in the pound.
Connor Campbell, financial analyst at SpreadEx said: "The pound largely spent the session treading water, trying to ignore claims that a no-deal Brexit is a 'dangerously realistic' scenario as it hopes that reports the EU is willing to extend the deadline to next summer are true."
In company news, Ladbrokes owner GVC said online growth means the gambling firm's earnings for 2019 will be higher than previously forecast but held firm on plans to shut 900 stores over the next two years.
Investors appeared pleased with the news, with shares closing up 38.6p at 788.6p.
Car dealership Vertu Motors revealed a 7% fall in half-year profits to £16.1 million as sales of new cars tumbled more than 10% amid price hikes caused by the Brexit-hit pound, with drivers holding onto their current cars longer.
Shareholders appeared happy with the news - with many expecting worse numbers - sending shares up 1.45p to 34p.
BT announced plans to upgrade 700,000 homes to faster broadband by the summer, along with an overhaul of its 600 high street stores. Shares closed up 1.84p at 177.98p.
B&Q owner Kingfisher revealed it has hired Bernard Bot as its new finance chief amid a refresh at the top of the DIY group.
Mr Bot joins from global technology platform Travelport Worldwide, where he has acted as chief financial officer and executive vice-president since 2016.
Shareholders approved, with shares closing up 2.8p at 185.9p.
The FTSE 100 biggest risers were the London Stock Exchange Group up 228p at 7,248p; Hargreaves Lansdown up 45p at 1,816.5p; Anglo American up 33.6p at 1,850p; CRH up 36p at 2,641p and Astrazeneca up 82p at 7,091p.
The biggest fallers were Rightmove down 18.8p at 519p; Fresnillo down 19.4p at 669.4p; Halma down 44p at 1,890p; Sainsbury's down 4.5p at 202.3p and Centrica down 1.38p at 68p.
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