As sterling recovers some of its recent heavy losses, leading shares have taken their cue from falls in overseas markets.

The prospect of a full debate on Brexit as now promised by prime minister Theresa May has awakened hopes that a hard line in negotiations with the EU may be moderated, lifting the pound by more than 1% to $1.2272.

But a disappointing start to the US results season in the shape of Alcoa pushed US markets lower, and this fed through to Asia and now Europe. There is also some caution ahead of the release of the latest Federal Reserve minutes later, which could give more clues as to the likelihood of a US rate rise this year.

So the FTSE 100 has fallen 31.31 points to 7039.57, continuing the slide from its record intraday high on Tuesday.

But airline shares are in demand, helped by news that Monarch has received a £165m lifeline to keep flying as well as an announcement that the UK and Chinese governments had agreed to increase weekly flights between the two countries. Sentiment in the sector was also helped by an upgrade of Deutsche Lufthansa by analysts at Kepler Cheuvreux.

So easyJet has climbed 20.5p to 921p, as Cantor Fitzgerald issued a buy note after the budget’s airline’s bond issue. Analyst Robin Byde said:

EasyJet has issued a new 2023 bond at an attractive low coupon rate. To us this suggests market confidence in its budget airline business model and balance sheet. It follows a tough 2016, in which exceptional events (e.g. terrorist acts and air traffic control strikes) cost the airline over £200m. The stock has been weak, underperforming the European airlines sector in the past quarter and is good value, trading on a calendar 2017 estimated PE of 9 times. This is a 30% discount to its long-run average PE. The dividend yield is 5%. We note that consensus forecasts for this year (2017) have fallen sharply and now suggest no growth year-on-year. If 2017 proves to be less turbulent there could be good upside to consensus. We view the current price as an attractive entry level point and reiterate buy, with a target price of 1,300p.

Mike van Dulken, head of research at Accendo Markets, said:

It’s been a while since easyJet was top of the FTSE leader board. At least a week. Today’s gains come thanks to a welcome hat-trick of; 1) the pound regaining some poise versus the euro; 2) another successful €500m 7 year bond sale, and; 3) bargain hunters jumping on-board the current 8% bounce from an 850p level last traded in Jan 2013.

British Airways owner International Airlines Group is also better, up 3.2p at 379.3p.

Meanwhile InterContinental Hotels has climbed 26p to £32.70 despite JP Morgan issuing an underweight recommendation with a price target of £29.25, up from £27.23.

Among the fallers, Fresnillo has fallen 35p to £16.12 on profit taking after it reported a 6.7% rise in silver production in the third quarter. Numis said the report was disappointing:

Fresnillo’s third quarter production results were a miss in terms of silver production (10.6Moz) but in line in terms of gold 219.8koz. The miss was driven by lower grade at the Fresnillo mine with the remedial programme that the company has taken at the operation taking longer than expected. Management have also pushed out the commissioning of the second phase new 10Moz/year San Julian mine back to the second quarter 2017 from 2016. We view these results as incrementally negative but move from a sell to a reduce on unchanged multiples of 2 times net asset value and 15 times cash flow following the pullback in the share price.

Sports Direct International, which warned on Friday about the negative effects on its business of the slump in sterling, is down another 12.5p to 281p following the most recent decline, making it the biggest faller in the FTSE 250. Cantor Fitzgerald cut its price target from 320p to 260p, saying:

The news is obviously disappointing as not many forecasters would have predicted such further falls in sterling against the dollar. However, the company is not ‘out of the woods’ yet and faces further possible downgrades to earnings. It is also radically changing its strategy, which is not without risk. It will lead to an increase in debt levels eliminating the chances of a dividend increase and buyback in the medium term. In the meantime, the company will have difficulty in shrugging off its discount heritage; the currency led downgrade, in our view, represents a step down in profitability while the stock is now not ‘stand-out’ value on the basis of our revised forecasts, 13.7 times 2017 earnings forecasts. We are retaining our hold recommendation but downgrading our target price to 260p from 320p.