The FTSE 100 trimmed a strong early gain but was still significantly higher today as strong earnings figures from the likes of banking group HBOS outweighed an opening dip on Wall Street.
Positive corporate news from HBOS and oil and gas firm BG lent support, although fixed-line telecoms firm BT Group was the biggest faller following the release of disappointing sales growth figures.
At 2.05 p.m the FTSE 100 benchmark index was up 93.1 points, or 2.5 percent, at 3,870.2, having earlier reached a peak at 3,947.6. The index was still down more than eight percent in the past week.
"It's so very nervous, if Wall Street wobbles, we will start to collapse. We could easily finish quite a way down on the day, but if the Dow remains steady we could spike higher," one trader said.
US shares were unnerved by news of an inquiry into the accounting practices at US media giant AOL Time Warner.
The Dow Jones industrial average was down around 0.8 percent, a day after posting its second biggest points gain ever.
The tech-laden Nasdaq composite index was trading down 1.7 percent.
Banks added 28 points to the benchmark index, with HBOS up 6.8 percent after it posted first half profits at the top end of expectations and promised to beat all targets this year.
Lloyds TSB rose 6.9 percent, lifted by an upgrade from Merrill Lynch to "strong buy" from "buy".
Oils added 16 points to the FTSE's value, with Shell up 2.1 percent and BP rising 3.1 percent as crude oil prices rose overnight after the American Petroleum Institute reported that a steep drop in U.S. crude stocks.
Telecoms were mixed, with BT losing nine percent but mobile firm Vodafone up 6.4 percent, lifted by news Spain's Telefonica was backing out of its third-generation operations in Europe, which dealers said removed competition in the overcrowded European market.
P&O Princess Cruises topped the blue-chip risers, up 7.1 percent, aided by an upgrade from Morgan Stanley and better than expected results from Royal Caribbean Cruises.