The FTSE 100 made a rapid 1.5% gain in early trading on Friday as miners and banks made steady progress.
The Royal Bank of Scotland Group was the biggest mover after its share price climbed by more than 6%.
The rise followed news Bank of America, the US's largest bank, will receive $20bn of government aid and $118bn of guarantees against bad assets in return for a stake in the company.
The emergency funding, which comes on top of a recent $25bn capital injection from the Troubled Assets Relief Programme, will help the bank absorb the losses it incurred when it bought Merrill Lynch.
Fears the company's worsening capital base could filter through to the wider economy sparked the government action.
"The objective of this programme is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings and retirement security," a US Treasury spokesperson said.
Bank of America's problems intensified after it took over Merrill Lynch, one of the most notable victims of the credit crunch. The firm underestimated the levels of debt it was taking on as a result of the deal.
Rio Tinto registered a rise of almost 8% after denying it is planning a rights issue, helping London's blue-chip index climb to 4,190. Meanwhile, Eurasian climbed 6.41% while Xstrata rose 5.93%.
Meanwhile, the Irish government has said it is to nationalise Anglo Irish Bank after deciding pumping money into the lender was not enough to secure its future.
In the US, the Dow Jones was up 0.15%. Home Depot was the biggest winner rising 4.11 % when the market closed. Alcoa also rose 3.77%.
Following news of government aid, Bank of America recorded the largest loss on the Dow Jones dropping 18.43% by the end of the day.IFAonline
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