The FTSE 100 staged a recovery in early trading and was 1.6 per cent higher by 10:00 GMT as commodities and financial stocks rallied.
Prudential was up 7.6 per cent, while Xstrata rose 6.61 per cent and Lloyds TSB was trading 6.19 per cent higher.
The index was lifted by a surge in the US stock market, with the Dow Jones closing 2.91 per cent higher.
Overnight, the Asian markets also rallied, with Japan's Nikkei up 1.95 per cent and Hong Kong's Hang Seng index closing 1.37 per cent higher.
A handful of stocks were in the red this morning. Kingfisher shares fell by 5.86 per cent after the retail group announced a fall in profits, while Antofagasta shares fell 2.68 per cent.
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