The FTSE 100 rose 1.48% or 76.18 points to 5,227.50 as sentiment was boosted by a strong showing from Wall Street and Asia overnight.
The FTSE continues to fall, weighed down by fears over the global economic recovery and a massive sell-off in BP shares.
Banks in the eurozone will suffer "considerable" loan losses in 2010 and 2011, potentially leading to €195bn (£165bn) in futher write-downs, the European Central Bank (ECB) warns.
The Dow Jones has opened trading in negative territory with yesterday's surge petering out as cautious investors look to keep hold of profits ahead of the long weekend.
Global equity markets rallied yesterday as China denied reports it was reviewing its eurozone investments, with markets on both sides of the Atlantic climbing over 3%.
Commodities continue to boom in popularity as an asset class underlying exchange-traded products. Yet fluid definitions of product structures are causing confusion, as Helen Fowler discovers
The FTSE continued to slide in Tuesday trade as ongoing concerns over the eurozone and political tensions in Korea weighed heavily on investors.
US markets opened lower today amid investor concerns over the eurozone and political turmoil in Korea.
Updated 1.40pm: The FTSE recovered slightly after plunging at midday on news of the coalition government's £6.2bn spending cuts.
US markets plummeted almost 4% yesterday as the fallout from the eurozone crisis continued to escalate.