The FTSE 100 Index yesterday fought back from one of its worst sessions in recent years, on the back of an interest rate cut by China's central bank.
London's top-flight closed up 182 points, or 3.09%, adding about £47 billion back on to the value of the UK's top 100 listed companies after £74 billion was wiped off the index in the previous session.
It meant the blue-chip share index had recovered most of the losses suffered on Monday when it dived by 4.7% – a slump that came at the end of 10 days in a row of declines in the FTSE 100's worst losing streak since 2003.
This is the index's biggest one-day rise since September 7 2011, when it climbed by 3.14%.
The one-day drop – which followed on from a 2.8% fall on Friday – had not been equalled since September 2011 while there had been none worse since the dark days of the downturn in 2009.
Investors have been spooked by the continuing falls in the Chinese stock market – which saw its worst fall for eight years at the start of the week and plunged by a further 7.6% overnight.
But the London market bounced back in early trading in the latest session, with investors hunting bargain-priced stocks and the panic that had seen trading screens turn red the day before ebbing away.
There was further cheer when China's central bank slashed interest rates by 0.25 percentage points – the fifth cut in nine months - in an effort to shore up its economic growth.
It also increased the amount of money available for lending by reducing the minimum reserves banks are required to hold.
German's Dax and France's Cac 40 both added more than 4%.
China's moves reassured global markets which have been rocked in recent weeks by the slowdown in the world's second biggest economy and the depreciation of the yuan – as well as plunging commodity prices.
Chancellor George Osborne said the volatility showed that "lots of risks" remained in the global economy and that Britain was "not immune to what goes on in the world".
London's top-flight remains in "correction" territory, more than 10% off its all-time closing high of 7,104 in April.
But almost all top-flight shares were ahead today, with the index pulled higher by a recovery in commodities stocks which have been pounded by the falls in metal prices caused by China's woes.
Antofagasta was up almost 9%, while Glencore and BHP Billiton each rose around 5%.
In New York, the Dow Jones Industrial Average was up by more than 350 points, or over 2%, at the time of the close in London.
Anna Stupnytska, global economist at Fidelity Worldwide Investment, said: "It's clear that China growth continues slowing and that policy action year to date has not been sufficient to prevent the industrial collapse.
"Today's move to cut interest rates and RRR (reserve requirement ratio) is certainly a step in the right direction.
"But while this might help sentiment, it's not enough to reverse the ongoing slowdown in China's growth. Some stabilisation in activity is probably the best case scenario. A sharp rebound is unlikely."
The volatility in global markets has prompted speculation that rate-setters on the Bank of England's Monetary Policy Committee (MPC) may want to push back the timing of any interest rate hike.
Paul Hollingsworth, UK economist at Capital Economics, said: "Although the UK has clearly been caught up in the recent meltdown in global financial markets, we doubt that it will knock the economic recovery off course.
"That said, it provides the more cautious members of the MPC with another reason to hold fire on voting to raise interest rates."