Markets surged higher after US Federal Reserve chair Janet Yellen said she expects the Fed to start raising rates by the end of the year.
The FTSE 100 Index added 147.5 points, or more than two per cent, to 6109, after a 70-point fall in the previous session.
Germany's Dax and France's Cac 40 were both ahead by around three per cent. In New York the Dow Jones Industrial Average jumped over 170 points in early trading.
It meant London's top-flight finished a volatile week just above last Friday's closing level of 6104.1.
The FTSE 100 had collapsed below the 6,000-mark with a three per cent drop on Wednesday on latest fears over China and the Volkswagen emissions scandal.
A decision by the Fed not to lift rates earlier this month had added to anxiety because it appeared to imply the US economy was not ready to withstand a hike yet given risks from the rest of the world.
But Ms Yellen's remarks that global weakness will not be significant enough to stop a rates rise this year removed some of the uncertainty facing markets.
Michael Hewson, chief market analyst at CMC Markets UK, said investors "appear to have liked the more upbeat tone" and greater clarity on timings.
On currency markets, sterling was down slightly against the US dollar at just under 1.52 and little changed against the euro at slightly above 1.35.
In London shares, banks - which stand to gain from a higher interest rate environment - were among those making gains.
Barclays rose more than three per cent, or 8.5p, to 255p, while HSBC added 15.5p to 503.6p and Royal Bank of Scotland climbed 8.3p to 319p.
Fellow state-backed lender Lloyds Banking Group added 1.7p to 75.5p as it was announced that the Government had sold another one per cent chunk of the group to take its stake below 12 per cent.
Almost all FTSE 100 stocks were ahead though a slide in the price of safe-haven gold - which had climbed amid recent share falls - saw gold miners turn lower. Randgold Resources fell 20p at 3926p while Fresnillo was down 2.5p at 618.5p.
Meanwhile, commodities giant Glencore, hard hit by recent turbulence, saw initial gains fade away to fall 1.4p at 97.2p.
Platinum metals company Johnson Matthey, the world's largest supplier of vehicle catalytic converters, continued its strong recovery after being hit by the escalating Volkswagen scandal. Shares climbed almost five per cent, or 116p at 2514p.
Elsewhere, tool and equipment firm HSS Hire made gains made after it announced that chief executive Chris Davies was stepping down.
The announcement come a month after HSS issued a profit warning and reported a widening half-year loss. Shares rose 1.5p to 60p.
The biggest risers on the FTSE 100 Index were ARM Holdings up 55.5 points to 982p, Johnson Matthey up 116p at 2514p, St. James Place up 37p at 873.5p and Unilever up 112p at 2650p.
The biggest fallers on the FTSE 100 Index were Anglo American down 9.9p at 614.7p, Glencore down 1.4p at 97.2p, Antofagasta down 5.5p at 506p and Randgold Resources down 20p at 3926p.
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