Good news from China helped the FTSE 100 close the day up as a tariff cut pledge and signs that the coronavirus outbreak is being contained to the country's mainland lifted investors' spirits.

Chinese officials revealed they will cut tariffs by 50% on $75 billion dollars worth (£58 billion) of goods from February 14 - a month after the US and China signed a pledge for a truce on their trade war.

According to the US, the levies hit more than 1,700 items in September, with seafood, poultry and soybeans suffering hardest.

The day's events saw the FTSE 100 close up 22.31 points, or 0.3%, at 7,504.79, with the Cac 40 in Paris up 0.9%, while the Dax 30 in Frankfurt closed 0.7% higher.

The tariff announcement also helped the US S&P 500 and Dow Jones indexes hit new highs at the opening bell on Thursday.

David Madden, CMC Markets analyst, said: "Traders jumped on this story as it shows the trading relationship between the two sides is taking a positive step.

"Beijing are under tremendous pressure on account of the worsening health situation, so the promise to lower tariffs is a convenient way to boost sentiment in the markets."

The calming over the coronavirus outbreak also helped investors, with market watchers seeming confident that the spread was being contained.

Alan McIntosh, chief investment strategist at Quilter Cheviot, said: "The US markets hitting all-time high levels is a lot to do with markets looking beyond the human tragedy represented by the coronavirus.

"There is a sense of optimism that it is largely contained within mainland China and less likely to become a global pandemic. In that scenario there is likely to be only a modest economic impact."

The boosts in the US had a negative impact on sterling, with a pound worth 1.293 dollars - a fall of 0.5%. Against the euro it was down 0.33% to 1.178 euros by the close of the stock markets.

In company news, Royal Mail shareholders took flight after the company warned its UK division could be loss-making next year and may miss turnaround targets amid the threat of strike action.

Shares closed down 10.45p, or 5.5%, at 178.9p - but hit record lows during the day, down 11% at times.

Investors in travel firm On the Beach hoping to cash in on the demise of Thomas Cook will have to wait a little longer, according to bosses, who said the full pay-off will come in the second half of the year.

But they seemed happy enough with the news and promise of "unprecedented opportunity", with shares closing up 27p, or 6.67%, at 432p.

Compass Group shareholders were also happy with progress at the catering business as shares closed up 51.5p, or 2.7%, at 1,958p. Bosses said revenues in the first quarter were up 5.3%, although the business will take a hit from the weak pound to the tune of £61 million.

The new chairwoman of Imperial Brands, Therese Esperdy, bought shares worth $577,440 (£446,439) in the company a day after hosting the firm's annual general meeting, where it was revealed on Thursday that 13% had voted against the pay awards for the board.

Shares in Imperial closed up 25.8p at 1,847.4p - although they fell by more than 7% on Wednesday.

The biggest risers on the FTSE 100 were Kingfisher up 5.9p at 213.7p, Vodafone up 4.04p at 151.02p, Evraz up 10.8p at 404.9p, Compass Group up 51.5p at 1,958p, and Tesco up 6.1p at 254.4p.

The biggest fallers were NMC Health down 70p at 900, Barratt Developments down 35p at 804.4p, Flutter Entertainment down 232p at 8,418p, Hargreaves Lansdown down 47p at 1,708.5p, and GSK down 44.8p at 1,694.8p.