VODAFONE led a welcome rally on the FTSE 100 Index as world markets bounced back from the recent heavy sell-off.

The mobile phone giant climbed 4% after chief executive Vittorio Colao reassured the City over the company's performance in emerging markets, contributing to a surge on the wider top tier.

London's FTSE 100 Index closed 100.4 points up at 6558.3 - a gain of 1.6% - spurred on by better-than-expected unemployment benefit claims figures in the America, which set the tone for tomorrow's key US jobs report.

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Financial markets across Europe responded to the news, with a 1.5% hike on Germany's Dax and the Cac 40 in France ahead 1.7%.

In currency markets, the pound fell against a strengthened euro after the European Central Bank decided not to cut interest rates as some traders had expected.

Sterling eased to 1.20 euros and held firm at 1.63 US dollars.

There was little reaction from investors after the Bank of England's monetary policy committee marked five continuous years of interest rates at their historic low of 0.5%.

In a busy session for corporate updates, pharmaceuticals company AstraZeneca was among the biggest FTSE 100 fallers amid its continuing battle against the impact of generic competition on some of its best-selling drugs.

The Cheshire-based firm trimmed earnings and sales guidance ahead of competition in the US for another of its top-sellers - popular heartburn and ulcer drug Nexium - from May.

It now expects 2014 sales to suffer falls in the low to mid-single digits, with earnings also likely to be impacted. Shares fell 61.5p to 3815.5p.

Attention was also focused on Vodafone as it raced 8p higher to 223.9p after it highlighted a "strong" performance in emerging markets, helping it to offset more challenging conditions in Europe.

Medical devices firm Smith & Nephew was another strong riser, up 21.5p to 896p, after it posted a rise in fourth quarter profit and said 2014 would see it target higher growth opportunities and continue to focus on improving its efficiency.

Elsewhere, shares in pub owner Enterprise Inns gave up recent gains as investors digested a 1% rise in net income for the first 18 weeks of its financial year.

The stock slipped 6.2p to 157p in the FTSE 250 Index as the company said trading conditions remained volatile and challenging.

The biggest FTSE 100 risers were Vodafone, Reckitt Benckiser, ahead 155p at 4812p, Glencore Xstrata, 9.5p higher at 322.5p and Aviva, 13.3p stronger at 453.2p.

The biggest FTSE 100 fallers were Randgold Resources, off 70p at 4336p, AstraZeneca, Fresnillo, 9.5p weaker at 782.5p and Associated British Foods, 24p lower at 2859p.