The FTSE 100 Index closed 35.5 points higher at 6263.9, having sunk more than 60 points yesterday in the wake of European Central Bank president Mario Draghi's pessimistic outlook for the eurozone.
The top tier had plunged more than 100 points on Monday – the biggest points fall in a day since July last year – amid fears of a return to political turmoil in Italy and Spain.
But there was some encouragement from the beleaguered region yesterday after EU leaders finally agreed a budget framework for the next seven years, which will see a real-terms cut in spending to €908 billion (£773bn).
Mining stocks were a big factor in London's improved performance, with Anglo American up 35.5p to 1972.5p and Eurasian Natural Resources ahead 6.7p to 377.7p after further signs of a rebound in China's export growth. There was also some cheer from America as robust trade figures suggested fourth quarter gross domestic product may be revised higher.
In currency news, the pound gained strength against most major currencies amid signs the Bank of England will refrain from extending its quantitative easing scheme.
Incoming Bank boss Mark Carney told MPs yesterday the current policy may be enough to spur on recovery, helping sterling rise to $1.58 and €1.18.
Banking stocks were among those on the risers board as they recouped yesterday's losses.
Asian-facing Standard Chartered rose 44p to 1694p, HSBC lifted 16.3p to 716.70p and Royal Bank of Scotland added 6.2p to 339.1p.
Barclays, which is due to present annual results on Tuesday, was 6.1p higher at 298.6p. New chief executive Antony Jenkins will also reveal his plans to repair the bank's battered reputation and overhaul its culture and practices following a string of damaging scandals.
Vodafone was another stock on the risers board, up 2.1p to 173.9p, after Bank of America Merrill Lynch upped its rating on the mobile phone giant to buy following the company's trading update yesterday.
It is hopeful the company will reap rewards in the US, where it is expected to see a sharp rise in dividends from its 45% stake in Verizon Wireless.
Meanwhile, defensive stocks were out of favour in the top flight, with Imperial Tobacco off 47p at 2300p after Investec Securities downgraded the cigarettes company to hold.
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