Britain's top share index gained 3.7 percent early on Friday after two days of sharp losses as investors looked to pick up cheap, heavily sold stocks, with banks and commodities leading the recovery.
By 0754 GMT the FTSE 100 was up 143.0 points at 4,004.4, after closing 5.4 percent lower on Thursday.
The index has lost 18 percent in October, on track for its biggest monthly fall since the 1987 crash and is down 38 percent this year.
Heavily sold miners were among the biggest gainers, as metals prices, which have fallen sharply this week, recovered.
Rio Tinto, Xtrata, Lonmin and Anglo American gained between 2.5 and 7.3 percent.
"Equities look attractive on a two- to three-year time horizon and people are beginning to extend their horizons beyond the current measures to support the banking system," said John Haynes, senior equity strategist at Rensburg Sheppards.
"Investors are looking to pick up value as they are thinking enough has been done to achieve those aims."
The rise in the UK market followed a rally in Asian shares prompted by encouraging earnings signals from technology firms and signs of easing in the gummed-up short-term money markets, after U.S. stocks rallied.
Energy stocks also bounced back as oil rose more than $3 a barrel, rebounding from a 15-month low below $70 as rising equity prices lifted hopes for demand and on growing expectations of an OPEC production cut.
BP gained 5.7 percent, BG Group added 4.7 percent, while Cairn Energy was up 4.8 percent.
Battered banks also recovered, as investors' fears about the health of the global financial system eased slightly.
Barclays, HSBC Standard Chartered and Lloyds TSB gained between 1.4 and 4 percent.
The chairman of Britain's financial regulator, Adair Turner, said on Friday that the global banking system is past the danger of systemic meltdown following government intervention, but there will still be economic consequences.
Other financial stocks were also in positive territory with interdealer broker ICAP gaining 2.4 percent, and insurer Standard Life adding 3.9 percent, while Old Mutual was the FTSE 100's top riser, adding 10.7 percent. Prudential put on 3.3 percent after the Financial Times said last night it was forced to deny planning an imminent rights issue as worries about the global economy spread to insurers.
Intercontinental Hotels fell 0.9 percent after JP Morgan cut its price target on the company and other European hotel stocks.
British Land and Land Securities were also in the red with sentiment on the lacklustre UK property market weighing on the stocks.
Demonstrating the weakness of the market, HSBC is in talks to buy back its UK headquarters in Canary Wharf for up to 300 million pounds less than it sold the tower to property company Metrovacesa only a year ago, the Financial Times said.
