The FTSE-100 index recouped a large chunk of the losses seen during the previous session to close 55.44 points higher at 6325.88.
While traders warned that fears of more eurozone turmoil due to the latest Italian political crisis had not gone away, there was encouragement in better-than-expected pending new home sales data in the US.
Federal Reserve chairman Ben Bernanke's strong defence of the current asset purchase programme during testimony to Congress has also lifted the Dow Jones industrial average over the last two sessions.
The Wall Street rally came despite the prospect of automatic spending cuts tomorrow, although there are still hopes President Barack Obama will attempt to piece together a package of measures to minimise the effects. The pound, which has endured a volatile week following the downgrade of the AAA credit rating by Moody's, steadied yesterday with sterling flat against the US dollar at 1.51 and marginally lower versus the euro at 1.15.
However, gold prices have benefited from the latest eurozone uncertainty, with the traditional safe haven rebounding from a recent seven-month low to stand at more than $1600 an ounce.
Broadcaster ITV failed to extend recent gains after posting a 17% rise in full-year profits and a special dividend payment worth £156 million.
The shares have risen to a five-year high in recent weeks, but investors took the opportunity to lock in profits, even though chief executive Adam Crozier hailed the ongoing success of the company's five-year turnaround programme. However, as he also poured cold water on recent takeover speculation, the stock slipped 1.2p to 119p.
British Gas owner Centrica declined 1.3p to 347.8p after a 14% rise in full-year operating profits to £2.7 billion met City expectations.
The firm, which drew flak for revealing a £606m profits haul from its residential arm months after hiking customer tariffs, also announced plans to expand its operations in North America.
Glasgow-based pumps and valves group Weir, which serves the oil and gas sector, topped the Footsie risers' board after it reported a 12% lift in pre-tax profits for 2012 and said it expects to build on the record performance with more revenues growth. The shares rose 7%, or 158p, to £23.22.