UK and European shares recovered on Friday, rubbing out the losses of the previous day, which were caused by bomb attacks in London that killed at least 50 people.

The British pound, however, continued to slide, hitting an 19-month low against the US dollar and taking its decline to five per cent in the past two weeks.

As news of the bombings emerged on Thursday, the FTSE 100 slump wiped more than £44bn off the value of the stocks in London.

But by Thursday afternoon the FTSE rebounded to close just 1.4 per cent lower at 5,158.

Despite initial concerns about the economic impact of Thursday’s London attacks, traders and investors believe any market decline is likely to be short-lived as the threat passes and the extent of damage becomes clearer.

Analysts said that the economic effect of the bomb blasts was likely to be limited and companies were well prepared to deal with any disruption.

"Unfortunately, we expected it to come," said Andrea Williams, head of European equities at Royal London Asset Management.

"It came and it doesn't really affect economic growth. This is something which you have to price into the markets."

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