Global markets soared on Friday as investor concerns eased about the severity of sanctions imposed on Russia following its invasion of Ukraine.

Coordinated Western sanctions against Russia have targeted its banks but left its energy sector largely untouched.

After sharp falls on Thursday, stock markets in the UK and Europe jumped more than 3%. US exchanges also rose.

Oil prices reversed early gains on Friday and fell by more than 2% but are still trading near seven-year highs.

Brent crude – the international benchmark for oil prices – dropped below $98 a barrel.

The share price gains followed weeks of declines, fuelled in part by concerns about Europe’s most severe conflict since World War Two.

While the sanctions against Russia include freezing bank assets and cutting off state-owned enterprises, they stopped short of disconnecting Russia from the Swift international banking system or targeting its oil and gas exports, which some analysts said had helped stock markets start to recover.

“It’s not that the market is saying the war is good news. They were worried about the war and selling off, and now it’s happened and paradoxically it’s not as bad as the worst case scenario, at least not yet,” said Jonas Golterman, senior markets economist at Capital Economics.

The UK’s FTSE 100 index rose 3.9%- the biggest daily gain since November 2020 when Pfizer announced a vaccine breakthrough – and stock markets in Germany and France closed more than 3.5% higher.

In the US, the Dow Jones Industrial Average closed 2.5% higher, while the S&P 500 rose 2.2% and the Nasdaq climbed 1.6%, extending gains from Thursday.

Markets in Asia also closed higher.

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The gains came despite fighting across Ukraine on Friday forced tens of thousands of people from their homes.

The US, UK and EU said Friday they would place sanctions on Russian President Vladimir Putin, but China’s foreign ministry also reported that Mr Putin might be willing to hold talks with Ukraine.

“This is a very sentiment driven market right now, so if there is even a whisper that there might be willingness to talk, the market will rally and rally hard,” said Ross Mayfield, a US-based investment strategy analyst at Baird investment bank.

“That’s not based on fundamentals. That’s pure sentiment.”

After the earlier global sell-off of shares, investors were also “looking for bargains”, said Jane Foley, head of currency strategy at Rabobank.

Ms Foley told the BBC’s Today programme there were many firms in emerging markets which export agricultural products and raw materials such as metals, so “perhaps they’re going to be doin

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