Britain's top share index was up 1.7 percent at midday on Tuesday, with banks and miners topping the leader board as concerns abated over Dubai's debt problems.
By 1220 GMT the FTSE 100 index was up 90.04 points at 5280.72, having fallen by 55.05 points or 1.1 percent on Monday to end at its lowest closing level for three weeks.
The blue chip index posted its biggest one-day percentage fall in eight months last Thursday after Dubai sought a debt standstill for state-owned conglomerate Dubai World.
Overnight on Monday Dubai World unveiled plans to restructure about $26 billion in debt out of the estimated total of $59 billion which it owes, reassuring investors that the emirate's debt problems can be contained.
We're seeing a continuing recovery from that (the Dubai World worries) and also with the year-end in mind there's a certain amount of window dressing going on, said Angus Campbell, head of sales at Capital Spreads..
Had the U.S. and Middle Eastern markets been open last week then the reaction wouldn't have been quite so severe, Campbell added.
Banks were the biggest gainers as recent worries over their exposure to Dubai's debts eased, with Royal Bank of Scotland (RBS.L), HSBC (HSBA.L), Barclays (BARC.L) and Standard Chartered (STAN.L) gaining 2 to 4.2 percent.
Lloyds Banking Group (LLOY.L) missed out, losing 1.3 percent as KBW slashed its target price to 65 pence from 105 pence, as the bank pushed ahead with its record rights issue, which was priced last week at 37 pence a share to raise 13.5 billion pounds.
Miners were bolstered by stronger metal prices as the dollar weakened with investors unwinding moves into the safety of the U.S. currency made on Dubai concerns.
Eurasian Natural Resources (ENRC.L) was up 4.6 percent bolstered as well by news of the stock's inclusion on BofA Merrill Lynch's influential Europe 1 list and by a Credit Suisse upgrade to outperform on Monday.
Xstrata (XTA.L), Rio Tinto (RIO.L), BHP Billiton (BLT.L), Fresnillo (FRES.L), Vedanta Resources (VED.L), and Anglo American (AAL.L) climbed 1.7 to 5.4 percent higher.
The shareholders of diamond miner De Beers, including 45 percent owner Anglo American, have agreed in principle to a rights issue to reduce the firm's debt.
Oil majors added their support as crude prices CLc1 firmed as well, with BP (BP.L), BG Group (BG.L), and Royal Dutch Shell (RDSa.L) up 1.1 to 2 percent.
PROPERTY FIRMS EYED
Hammerson (HMSO.L) rose 3.5 percent as Morgan Stanley resumed coverage of the property firm with an overweight stance.
The broker said the market undervalues the company's UK development prospects. Within the sector, British Land (BLND.L), Land Securities Group (LAND.L), Liberty International (LII.L) and Segro (SGRO.L) added between 2.3 and 4.1 percent.
Mid cap housebuilder Persimmon (PSN.L) gained 6.4 percent as Arbuthnot upped its rating on the company to buy from neutral on valuation grounds.
Other mid cap performers included pubs operator Greene King (GNK.L) up 5.4 percent after strong first-half results, with KBC Peel Hunt prompted to raise its rating to buy from hold.
Fallers were in short supply on the main index. TUI Travel (TT.L) shed 1.3 percent after its in-line full-year results failed to live up to high market expectations after a strong run by the stock ahead of the numbers.
Peer Thomas Cook (TCG.L) also fell 1.3 percent.
Economic data showed British manufacturing activity grew more slowly than expected in November and there were signs that the sector's fledgling recovery might have lost some pace.
British house prices rose 0.5 percent in November, the same as in October, suggesting that a rapid initial rebound from the five-year low set in February is now slowing, mortgage lender Nationwide said on Tuesday.
Later in the session U.S. November ISM Manufacturing data and October Pending Home Sales numbers are due out.