The FTSE rallied to an upbeat close after a six day fall, spending the day “in recovery mode”, analysts said.
The FTSE 100 closed up 1.75 per cent at 5,696.11 as investors moved back into oversold stocks, with commodity stocks and chipmakers leading the gains and only six of its constituents closing lower.
Stockbroker UBS issued a note detailing stocks it felt were most oversold, which included Prudential, Man Group and cruise operator Carnival.
“The London market managed to avoid the massive volatility seen last night and in the early hours of this morning, spending virtually all of today’s session in recovery mode,” said IG Index chief market strategist David Jones.
“Some of the hardest hit in recent days, such as the mining stocks, have been the leaders today, as investors decided there were bargains to be had."
Miners are expected to benefit from rising demand for materials by Japan as it begins to rebuild its shattered coastal regions. They also rose on improvements in the copper price.
ARM Holdings rose furthest, up 5.9 per cent to 533.5p, backed by Eurasian Natural Resources Corp, up 4.5 per cent at 899p. Fellow miners Antofagasta, Xstrata and Kazakhmys also made the top ten.
Oil prices gained $3 (£1.87) as unrest in the Gulf and Libya heightened fears of disruption to the oil supply and the fallout from Japan’s crisis.
Finance stocks were the largest fallers, led by Man Group, down 2.1 per cent at 244.2p and Schroders, down 0.4 per cent to 1,684p.
Lloyds Banking Group also ended marginally down, losing 0.1 per cent to close at 59.37p on the news that it is to axe 570 jobs and close its Cheltenham & Gloucester mortgage range.
US markets have also moved into the black, with all three major indices recovering oil firms Chevron, Schlumberger and Cliffs Natural Resources all posting decent gains.
But analysts warned that more volatility was expected at any time as news from Libya or Japan could tip sentiment in global markets again.
“There is optimism that the worst could well be over and with the G7 supposed to be meeting later today there is some optimism that finance ministers may sanction measures to calm the markets,” said CMC Markets analyst Michael Hewson.
“However any action could pale into insignificance if the nuclear situation deteriorates any further.”