European and US stock markets have recovered and oil and gas prices eased, sending some relief to investors after a bruising start to the week despite war in the Middle East stoking fears about the longer-term hit to the economy.

In the UK, the FTSE 100 gained about 80 points to close 0.8% higher at 10,567.65, having slumped nearly 3% on Tuesday amid worries of a prolonged conflict.

Stocks were also rebounding across Europe, with Germany’s Dax up 1.8% at the end of the day, and France’s Cac rising 0.8%.

Over on Wall Street, trading got off to a positive start, with the S&P 500 up 0.85% and Dow Jones 0.65% higher by the time European markets closed.

Global financial markets are largely being led by the movement of wholesale energy prices, which were spiking on Monday and Tuesday as concerns grew about disruption to supply in affected parts of the Middle East.

But there was some steadying to prices on Wednesday, with Brent crude oil down about 0.5% to 80.9 dollars a barrel, and a European benchmark for natural gas slipping by about 9%.

Despite easing back slightly, the prices of both commodities remains substantially higher than last week.

Analysts at Cornwall Insights warned on Wednesday that household energy bills are forecast to rise by 10% from July following the sharp increases in wholesale gas prices.

However, it said the final price cap figure would be based on average wholesale prices over a three-month period, meaning that it would depend on how long gas prices stayed elevated and how long the period of volatility continued.

The share prices of London-listed energy giants BP and Shell were down about 2% on the back of easing prices.

Russ Mould, investment director for AJ Bell, said: “The FTSE 100 and other European markets took their cue from US gains to trade firmly higher, with some of the names caught up in the heavy selling at the start of the week bouncing back from their lows.

“This presents a salutary reminder to investors caught up in the recent volatility that ups and downs are a natural feature of financial markets.

“But the waters remain choppy. Wall Street has been oscillating between healthy gains and more modest moves higher, which hints at continuing nervousness about the outlook amid what remains a fast-moving set of events in the Middle East.”