The FTSE 100 surged 1.9% when the market reopened on Tuesday after a bank holiday weekend and the more UK-focused FTSE 250 index rose 3%. European shares moved towards an 11-week high, with investor sentiment also boosted by Germanys €9bn (£8bn) bailout of the Lufthansa airline.
Airline and hotel companies were the best UK performers during morning trading, as British Airways owner International Airlines Group (IAG) soared 15% and Intercontinental Hotels Group jumped more than 14%. Whitbread, the pubs group and owner of the Premier Inn chain, also rose 14%.
Budget carrier EasyJet rose 11.5%, along with jet engine maker Rolls-Royce which climbed 9%, while cruise operator Carnival was 11% higher.
Investors were boosted by Boris Johnsons decision to set out a timeline for the reopening of outdoor markets and car showrooms in England from 1 June. High street shops, department stores and shopping centres will all be allowed to open from 15 June as long as they can show they are “Covid secure”, the prime minister said on Monday.
On the FTSE 250, Europes largest travel group Tui, which has received a German state bailout, surged 35% on Tuesday morning, pubs group Mitchells & Butler was up 25% and Cineworld rose 23%.
“Strength in this sector underscores confidence among investors that economies are reopening, and consumers are keen to travel,” said Neil Wilson, the chief market analyst at trading platform Markets.com.
He added: “There is a lot more hope that travel restrictions across Europe will be eased in time for the summer holidays. If the summer holiday season can be saved it would be a big plus after most of us wrote it off.”
Retailers were also among the gainers on Tuesday, with clothing chains JD Sports up 11% and Next up 6%.
However, a continuing stock market rally depends on whether lockdown measures can be further eased, said Russ Mould, investment director at stockbroker AJ Bell: “Another key unknown is the extent to which a period in effective quarantine has affected consumer behaviour. This could take longer to become apparent.”