The FTSE 100 closed up 78.12 points, or 1.45 per cent, at 5,484.06, its highest closing level since January 19, after climbing 1 per cent on Monday.
“The markets seem to have had their correction from the January highs,” said Angus Campbell, head of sales at Capital Spreads.
“We’ve absorbed the bad news now and investors can focus back again on earnings.”
Banks were in demand, with HSBC recovering 2.7 per cent after its sharp fall on Monday which followed below-forecast results.
Standard Chartered, set to post full-year numbers today, put on 4.2 per cent, while Royal Bank of Scotland, Lloyds Banking Group and Barclays gained 2.3-3.1 per cent.
Miners rose, bolstered by firmer metals prices and a bullish review from Nomura, which raised targets across the sector.
Mexican silver miner Fresnillo stood out, gaining 4.5 per cent after posting a forecast-beating 141 percent rise in 2009 profit on higher prices and stronger output.
Anglo American, Rio Tinto, BHP Billiton and Antofagasta added 1.9-2.8 per cent.
But Vedanta Resources missed out, shedding 3.3 per cent after launching a $775m convertible bond issue.
As the crude price rose, oil majors also provided support for the blue chips, spearheaded by Tullow Oil, up 2.7 per cent with traders citing market talk that BP was planning a £15 per share bid. BP, which rose 0.7 per cent, and Tullow declined comment.
Royal Dutch Shell, BG Group and Cairn Energy added 1.6-2.1 percent.
Among individual gainers, British Airways was the top FTSE 100 riser, up 6.2 per cent following positive results from fellow carriers Continental Airlines and Lufthansa, while an industry body said the recovery in global demand for air traffic was gathering pace.
Chipmaker ARM Holdings also saw good support, ahead 4.3 per ent supported by an upbeat outlook statement from SanDisk and by a bullish note on the sector from UBS.
Life insurer Prudential was the biggest blue-chip loser, down 8 percent, extending Monday’s falls following its move to buy American International Group’s Asian arm for $35.5bn, funded by a $21bn offer.
Motor insurer Admiral Group was also under pressure, down 3.3 per cent after in-line full-year results failed to excite, with KBC Peel Hunt prompted to cut its rating to “hold”.
Sterling fell yesterday as the prospect of a hung parliament continued to pressure the currency, though it stayed above a ten-month low against the dollar on Monday.
Weekend polls suggested the Labour party may hang on another term, as the Conservatives saw their lead cut back, with neither likely to secure a parliamentary majority.