The FTSE 100 Index bounced back from six straight sessions in the red today as world markets regained their poise.
Positive US economic news and firmer metal prices provided some much-needed respite from the Japanese crisis, with investors snapping up cheap-looking stocks.
The Footsie surged 1.7%, closing up 97.9 points to 5696.1, while the Dow Jones Industrial Average in America added 1.3% in early trading.
Indices across Europe staged a similar fight-back, with the Cac 40 in France up 2.4% and Germany’s Dax 2.2% ahead.
Figures revealing a bigger-than-unexpected drop in US unemployment claims spurred on gains and helped the recovery.
Investors have been swamped with unsettling news in recent days with unrest in Bahrain and Europe’s sovereign debt worries coming on top of the Japanese earthquake and crisis at the Fukushima nuclear plant.
The Nikkei, which fell heavily on Monday and Tuesday before a rebound yesterday, slipped 1.4% in Tokyo, but the decline was not as bad as earlier in the session.
Even though the situation at the nuclear plant remained uncertain, investors took the opportunity to buy into recent losses for some of London’s biggest stocks.
Hopes of intervention to stabilise financial markets from G7 finance ministers, who have convened an emergency meeting, also boosted trader confidence.
The pound rose against the euro and the US dollar, helped by a Bank of England survey showing inflation expectations at their highest for two years, which some took as further pressure to raise interest rates.
Stocks benefiting from the rebound included firms in the insurance sector as Aviva rose 15.8p to 437p and Prudential lifted 16.5p to 690p.
However, Legal & General eased back as the insurer failed to benefit from its announcement of a 24% rise in its full-year dividend. Analysts praised its full-year results, which showed a 2% rise in group pre-tax profits, but shares were down by 0.4p to 110.7p.
Roofing and insulation specialist SIG jumped 8% or 9.4p to 130.5p, in the FTSE 250 Index after it posted a 3% improvement in underlying profits and said it planned to resume dividend payments later this year.
In a strong session for stocks in the FTSE 250 Index, Heritage Oil rose 8% or 23.8p to 313.5p after the Financial Times said the oil and gas explorer had received an informal takeover approach from a Middle Eastern company.
Heritage, which is focused on Africa, the Middle East and Russia, is understood to have rejected the offer worth 425p a share.
It was joined on the risers board by bakery chain Greggs, which enjoyed another strong session in the wake of its full-year results on Wednesday.
Greggs posted an 8% rise in profits and sounded hopeful about its ability to offset rising costs this year, prompting shares to lift another 33.3p to 499.6p.
The biggest Footsie risers were Arm Holdings up 29.5p to 533.5p, Eurasian Natural Resources ahead 39p to 899p, Antofagasta up 55p to 1347p and Weir up 65p to 1606p.
The biggest Footsie fallers were Man Group down 5.3p to 244.2p, Schroders off 7p to 1684p, Legal & General down 0.4p to 110.7p and SAB Miller down 3p to 1981.5p.