Top shares posted their highest weekly percentage gain since January 2009, buoyed by central banks' moves to boost liquidity and prospects for next week's key summit to tackle the euro zone debt crisis.
U.S. data showing the unemployment rate fell to a 2-1/2 year low in November also helped the market's appetite for risk on Friday although the pace of hiring remained too slow to suggest a significant quickening of the recovery.
Beaten-down banking stocks were the best performers in terms of sectors with Barclays
The FTSE 100 <.FTSE> closed up 62.95 points, or 1.2 percent, at 5,552.29, bouncing back after Thursday's 0.3 percent slip in the wake of Wednesday's 3.2 percent jump. Over the course of the week, the index firmed 7.5 percent.
Nicolas Suiffet, technical analyst at Trading Central in Paris, said the trend indicated the index was set for a limited rise towards 5,615... ahead of a consolidation move.
Alternatively, downside penetration of 5,471 will call for a drop towards 5,402.
Citigroup saw the FTSE 100 trapped in a range of 5,700 to 4,700 until a clearer solution to the European sovereign debt crisis is found, and said a key theme against the tough economic backdrop is to gain exposure to 'growth' and 'quality' stocks.
The bank said it has made its overweight sectors slightly more mega-cap tilted, with upgrades for pharma, oil and mobile telcos.
Citigroup downgraded banks along with food and beverage to neutral, while support services moved to underweight, as did financial services.
Markets are now waiting for a European Union summit scheduled for December 9 for any indications of more progress in dealing with the euro zone crisis.
French President Nicolas Sarkozy said he and German Chancellor Angela Merkel would meet on Monday to outline joint proposals to put to next week's EU summit, seen as make-or-break for the 12-year-old single currency.
Andrew Bell, chief executive of the 1.1 billion pound Witan Investment Trust, identified two key issues Europe must resolve if the recent relief rally is to turn into a genuine recovery in equity markets.
The first is how it can generate economic growth in peripheral economies that have lost competitiveness, and the second is how to restore market confidence in lending to European states and banks.
Having raised so many doubts over States' financial stability and the banks' exposure to the risk of European sovereign defaults, the authorities will find it is expensive to win back the markets' confidence.
(This is) in terms of demonstrating willingness to cap rates for 'solvent but indebted' states and restoring the proper functioning of the interbank lending markets. Confidence, like reputation, is much harder to restore than to lose.
As the outlook for the British and European economies deteriorates, UBS recommends picking UK stocks exposed to growth prospects outside of the region, such as Rio Tinto
(Additional reporting by Jon Hopkins; Editing by David Cowell)