Britain's FTSE 100 bounced off three-month closing lows on Friday, led by banks and commodity stocks as fresh hopes of a deal for Greece and comments from China soothed global growth worries.
Having been rattled in the previous session after downbeat comments from the U.S. Federal Reserve and disappointing data from China sparked fresh fears of a slowdown in global growth, London's blue chip index rose 71.82 points, or 1.3 percent at 5,746.20 by 0738 GMT on Friday, eradicating most of Thursday's losses.
The UK's top share index rebounded in tandem with overnight gains in the U.S. and Asia, which climbed on optimism over a Greek debt deal and bullish comments from Chinese Premier Wen Jiabao.
Late on Thursday, Greece reached an agreement with EU and IMF leaders on additional tax hikes and spending cuts to plug a 3.8 billion euro funding gap, paving the way for the disbursal of a much needed aid package in July.
"There's still the far from insignificant matter that the Greek parliament has to vote on these measures," Cameron Peacock, market analyst at IG Markets, said.
"But this at least helps raise the prospect that default can be avoided for the time being and should in turn help the global economy return to growth."
Miners and integrated oil stocks , top fallers in the previous session, rebounded while banks also rallied as risk appetite returned among investors.
Between them the three sectors added 44 of the 71 points gained on the FTSE 100.
Sentiment was further helped after Chinese Premier Wen Jiabao was quoted by the Financial Times as saying he was confident price rises, which have been blamed for spiralling inflation and stifling the global economic recovery, would be kept firmly under control this year, giving players a reason cover short positions.
"Current lead indicators and macro data point to an easing of growth not an incipient recession. We expect earnings growth to be around 10 percent this year excluding commodities," said Andras Vig, analyst at Citigroup.
He argued investors should continue buying UK equities on the dips.
"UK equities trade on below-average multiples on nearly all measures. Much is in the price already for the tail risk of global recession and high margins. We maintain our year target of 6,750 for the FTSE 100."
There was just one faller on London's blue chip index, Inmarsat , which fell 0.5 percent after recent gains.
No important British data will be released on Friday, but the Bank of England's new regulatory body, the Financial Policy Committee, will publish the minutes from its first meeting held on June 16.