British Equities Rally After Sharp Sell-Off, Construction Stocks Lead Gains

British equities rebounded on Tuesday, driven by construction stocks, after a significant sell-off due to U.S. recession fears. The FTSE 100 rose 0.2% and the FTSE 250 gained 0.6%. Keller Group surged 11.6% on positive results, while Domino's Pizza and Travis Perkins saw declines due to profit warnings.

British equities rallied on Tuesday, buoyed by construction stocks, following a significant sell-off triggered by concerns of a U.S. recession.

The blue-chip FTSE 100 index ended the day 0.2% higher, recovering from its biggest fall in over a year on Monday. Similarly, the mid-cap FTSE 250 index gained 0.6% after hitting its lowest level in more than three months in the previous session. Investors sought safe-haven assets amid fears of a global market downturn, driven by weaker U.S. economic data.

However, data on Monday showed a rebound in U.S. services sector activity and comments from Federal Reserve policymakers helped to mitigate some losses. Richard Flax, chief investment officer at Moneyfarm, noted, "There's a little bit of everybody taking a bit of a breather today and thinking about how to digest the moves we've seen from a longer-term perspective."

In London, construction and materials shares led the gains, boosted by an 11.6% rise in Keller Group's stock following their half-yearly results. Growth in UK construction activity surged in July after the Labour Party's election victory, marking the fastest pace in over two years. In contrast, Domino's Pizza Group fell after lowering its full-year profit forecast. Travis Perkins also saw a decline, down 0.4%, after cutting its annual earnings guidance on reporting a 33% drop in first-half profit.

(With inputs from agencies.)