Europe's biggest markets recovered some ground yesterday following Monday's nosedive as traders turned back to tentative buying while the pound fell marginally.

In London, the leading indices finished some way off early morning highs as a cautious air continues to hover, keeping its gains behind that of some European and US counterparts. The FTSE-100 closed 36.74 points, or 0.54%, higher at 6,881.13 on Tuesday.

Danni Hewson, AJ Bell financial analyst, said: "Certainly London markets have made modest steps today, but the FTSE-100 has remained steadfastly below that 7,000 mark. No boomerang effect here – rather a cautious stabilisation highlighted by the mishmash of sectors topping the list of risers. Freedom day has come and gone and investors will undoubtedly be watching carefully to see how the changes manifest, which sectors will thrive and which will be hit by the next Covid curve ball."

In mainland Europe, the Dax lifted off two-month lows while French firms made the strongest gains.

The German Dax increased by 0.55% and the French CAC moved 0.81% higher.

Across the Atlantic, Wall Street looked in fine form as sentiment was helped along by a positive set of figures from technology giant IBM.

Sterling helped buoy the London market somewhat after dropping to February lows amid growing concerns that the reopening of the economy is not going as planned.

The pound was down 0.06% versus the greenback at $1.361 and was 0.04% lower against the single currency at €1.156.

In company news, mining giant BHP gained ground after it said it had shipped a record amount of iron ore in its latest production report. It was also being reported on Tuesday that the company was looking for a buyer for its oil and gas business, with an intention to exit fossil fuels. Shares in the FTSE-100 business were 41p higher at 2,188p.

Rolls-Royce was another London-listed firm to see its shares rise, having seen its value tumble in Monday's broad sell-off. The engineering giant was boosted as Citigroup analysts highlighted a positive outlook once the wide-body flying market recovered, indicating that in the long term it offered significant value. Shares took flight to close 3.02p higher at 90.02p.

Premium tonic and mixer maker Fever-Tree was in the red after it said its profits are taking a hit from the ongoing rising costs of logistics. Shares closed 177p lower at 2,273p after it highlighted a rise in global shipping costs due to Covid-19, while a shortage of heavy goods vehicle drivers in the UK is causing delays and increased costs across the entire grocery and delivery sector.

Just Eat Takeaway was one of the few risers on Monday but handed its gains back in the latest session, falling 291p to 5,743p as market confidence ebbed away.

The price of oil made a modest rebound after its mammoth tumble in the previous trading day, as concerns over the economic outlook tempered wider optimism. Brent crude rose by 1.2% to $69.45per barrel.