The FTSE 100 closed up 28.34 points, or 0.5 per cent, at 5,896.25, having hit a five-week closing low on Thursday.
Royal Bank of Scotland was by far the biggest riser, up 6.5 per cent to 44.94p on reports it was in negotiations to leave the government's asset protection scheme early. Analysts estimated it could make £100m from exiting the scheme.
Lloyds Banking Group also gained 0.8 per cent in sympathy with the move.
The index still closed more than 40 points below its high for the day, with volume at 145 per cent of the average of the last 90 trading days.
"A lot of short-term traders who bought in this morning after the sharp recent sell-off have achieved their aims and sold up," said Ed Woolfitt, head of trading at Galvan.
Some of the shares that were hardest hit in the sell-off this week were the strongest gainers, such as Weir Group, which bounced 2.23 per cent to close at 1,653p.
Search software firm Autonomy gained 3.93 per cent to 1,480p, helped by news of two licence deals for its Intelligent Data Operating Layer product.
“Technology shares got a nice boost after some broker upgrades across the sector, and this effect has rippled through to ARM Holdings, which pushed higher,” said Michael Hewson, market analyst at CMC Markets.
“Autonomy has joined RBS near the top of the leader board and started to claw back some ground after its recent declines, as it announced two more new contract wins to make it six this week,” he added.
Energy shares provided the bulk of the gains for the blue-chip index, with BG Group up 1.1 per cent and Royal Dutch Shell up 1.3 per cent, supported by new "buy" recommendations from Investec Securities.
Miners also recovered following recent sharp falls after soaring growth data from China raised fears of further interest rate rises there.
Among the fallers, luxury goods group Burberry shed 1.3 per cent to 1,031p, extending Thursday's falls on worries over the impact of any Chinese rate rise on its key Asian markets.
Solid figures from conglomerate General Electric helped US shares rise, but disappointing results from Bank of America kept the gains in check.
The Dow Jones industrial average was up 53.81 points, or 0.46 per cent, at 11,876.61. The Standard & Poor's 500 Index was up 6.78 points, or 0.53 per cent, at 1,287.04. The Nasdaq Composite Index was up 10.90 points, or 0.40 per cent, at 2,715.19.
“Wall Street has joined in the party mood, with earnings from GE far exceeding expectations and helping deflect attention from the chunky impairment charge lodged by Bank of America,” said Ben Critchley, a sales trader at IG Index.