UK stocks rebounded on Friday after a strong session in Asia overnight, while the shares of THG (THG) soared after the beleaguered e-commerce group saw takeover interest.

The FTSE 100 rose 124 points, or 1.7%, to 7,427 and the more domestically focused FTSE 250 made similar gains in morning trading. That put both indices on course to recoup all their losses from a volatile trading week as inflation concerns and weak corporate earnings sparked a huge selloff on Wall Street.

Analysts pointed to China cutting a key lending benchmark by more than expected, in a bid to revive its housing sector, as helping the change in sentiment.

All sectors were in positive territory, though stocks with exposure to the region’s growth led the gains, including the FTSE 100’s basic materials sector up nearly 2%.

Shares in increasingly Asia-focused insurer Prudential (PRU) rose 5% to £10.26, while peer Legal & General (LGEN) also performed strongly, up 3.3% to 255p.

AJ Bell analyst Russ Mould noted the bounce for UK stocks left the FTSE 100 down a ‘mere’ 1.4% year to date in a week when the blue-chip index was again providing its credentials. By comparison, the S&P 500 is down more than 18% in dollar terms.

‘Boring old commodity producers, utility providers and tobacco stocks have come to the UK market’s rescue, proving that successful investing is not all about backing the next big go-go growth stock,’ he said.

Mould also pointed to ‘better than expected’ data on the recent health of the British retail market, suggesting investors may have grown too pessimistic, although one survey showed consumer confidence had hit all-time lows.

UK retail sales rose 1.4% in April, the Office for National Statistics reported, versus forecasts of a 0.3% decline. Clothing sales were more resilient than expected, despite a sharp rise in energy bills when the price cap was lifted.

Separately, research firm GfK reported its UK consumer confidence index fell 2% to -40 in May, the lowest reading since records began in 1974 and fuelling recession concerns.

THG shares jumped more than 20% to 142p in early trading after the company rejected a takeover offer from two investment groups and property tycoon Nick Candy signalled his interest.

Late on Thursday, THG turned down a 170p-per-share proposal from Belerion Capital and King Street Capital Management, saying it undervalued the business. That bid was at a 46% premium to yesterday’s closing price, although still barely a fifth of the peak valuation close to 800p. Candy Ventures, the vehicle of British entrepreneur Candy, also said it was in the early stages of making an offer for THG.

The company, which owns online retail brands including Myprotein, has struggled to regain the confidence of the City after supply chain issues added to flagging confidence in the potential of its e-commerce platform.

The FTSE 250 rallied 305 points, or 1.6%, to 19,995, led by several beaten-up tech-related stocks. Darktrace (DARK) shares bounced 9.4% to 372p.

Chrysalis joins trust rally

Early-stage growth investment trust Chrysalis (CHRY ), which owns a stake in THG, rallied 3.8% to 126p. This was despite reports yesterday that Klarna, the Swedish buy-now-pay-later business that is its biggest holding, is seeking to raise new capital at a valuation in the low-$30bn range. This would represent a reduction of around 30% from the June 2021 valuation of $45.6bn, said broker Liberum.

‘The majority of the writedown implied by the latest funding round should already be reflected in Chrysalis,’ said analyst Conor Finn after the company knocked 13% off its net asset value last month.

Scottish Mortgage (SMT ), the global growth trust that has halved in the tech selloff since November, added 2% to 775.4p. Stablemate Baillie Gifford UK Growth (BGUK ) attempted to narrow its 15% share price discount with a 3.9% rebound to 160.7p. Chris Mills’ North Atlantic Smaller Companies (NAS ) also reflected the rally in domestic stocks, up 2.5% at £38.40 on a 30% discount.