The FTSE 100 Index is up 42.5 points, or 0.7%, to 5,765.1 this morning, beating a four and a half year high of 5,750.3 set earlier this month.
Shares in UK steel firm Corus have jumped 6.25p, or 9.96%, to 69p while Germany's Thyssen has added 7.83% to 21.90 euro.
Shares of steelmakers Mittal and Arcelor have been suspended amid market talk of a merger. Arcelor has gained 1.79% to 22.22 euro but Mittal has fallen 0.12% to 26.03 euro.
P&O has climbed 4.60% to 546p after state-backed Dubai Ports World upped its bid to 520p a share late on Thursday, topping a previously agreed 470p a share offer from Singapore's PSA International.
In Japan, the Nikkei 225 Stock Average jumped 569.66 points, or 3.6%, to 16,460.68, the highest since 8 September 2000.
Sony rose by the most in 15 years after predicting it will make a profit instead of a loss, bolstering investors' confidence in the earnings of its competitors including Sharp.
Sony surged 720 yen to 5,800, the highest since 18 July 2002, while Sharp rose 130 yen, or 6.4%, to 2,150 and Matsushita Electric Industrial advanced 115 yen, or 4.8%, to 2,530.
Domestic demand-related stocks, such as Mitsubishi UFJ Financial Group, advanced after a government report showed Japan's consumer prices rose for a second month in December, suggesting rising spending is helping Japan emerge from more than seven years of deflation.
Mitsubishi UFJ rose 80,000 yen, or 5.1%, to 1.66m, while Seven & I Holdings, Japan's largest retailer, gained 200 yen, or 4.1%, to 5,040.
Mitsui Trust Holdings, Japan's sixth-biggest banking group, surged 197 yen, or 12%, to 1,782 after the Asahi newspaper reported the bank may repay about 30bn yen of the public funds it owes during the six months thorough 30 September.
But non-bank lenders including Aiful fell after the Nihon Keizai newspaper reported regulators may limit borrowing by individuals. The Financial Services Agency may set a limit on the size of personal loans and interest charges to reduce the number of personal bankruptcies in Japan, the report said.
Aiful plunged 730 yen, or 8%, to 8,410 and Acom fell 240 yen, or 3.4%, to 6,930.
In the US, the Dow Jones industrial average was up 99.73 points, or 0.93%, at 10,809.47, buoyed by stronger-than-expected earnings from heavy equipment maker Caterpillar and a government report on durable goods orders that suggested the world's biggest economy is still on a stable growth path.
Caterpillar, up 5% at $65.17 on the New York Stock Exchange, gave the Dow its biggest lift. Earlier, Caterpillar shares climbed to a record $65.40 after the company said "unprecedented customer demand" for its construction and mining equipment drove its fourth-quarter profit.
The prospect of higher interest rates prompted investors to buy rate-sensitive stocks like Citigroup and JPMorgan Chase, both Dow components.
Shares of Citigroup rose 1.7%, or 78 cents, to $47.01, while JPMorgan Chase gained 2.9%, or $1.11, to $39.59.
But shares of General Motors bucked the trend, falling 3.4%, or 80 cents, to $23.05 after the world's largest auto maker said its fourth-quarter loss ballooned to $4.8 billion.IFAonline
Fidelity Multi Asset CIO's outlook
Willis Owen report
From 1 March
Fears ahead of end of QE
CEO of TeamBlockchain