Shares had risen strongly on Thursday, after the European Central Bank hinted it might take more action to try to boost the eurozone’s economy with London’s FTSE 100 index closing the week more than 2 per cent higher, and US markets also saw strong gains.
The rise in shares comes at the end of a turbulent week for the markets as they had dived earlier in the week as investors fretted over falling oil prices and prospects for China’s economy.
Sharp falls on Wednesday pushed many share indexes into a “bear market” – marking a 20% fall from recent peaks.
In London, the benchmark FTSE 100 share index ended 126 points, or 2.2% higher, at 5,900
For the week the FTSE 100 is 96 points, or 1.7%, higher.
Elsewhere in Europe, Germany’s Dax index finished 2% higher and in France the Cac 40 index was up 3.1%.
In the US, stocks on Wall Street performed strongly, with the Dow Jones Industrial Average climbing 1.2% by mid-afternoon.
The recovery in stocks had begun on Thursday, following comments from European Central Bank (ECB) president Mario Draghi.
The ECB has already cut its benchmark interest rate to just 0.05%, and is currently spending €60bn a month on bond purchases as part of its current stimulus programme.
However, Mr Draghi hinted that the bank might take more action to try to boost the eurozone later this year.
He said the bank would “review and possibly reconsider” monetary policy at its next meeting in March.
Mr Draghi also said eurozone rates would “stay at present or lower levels for an extended period” and there would be “no limits” to action to boost the eurozone.
Earlier on Friday, Japan’s Nikkei index jumped by nearly 6%. The market there had been lifted by speculation that the Bank of Japan was considering a fresh wave of stimulus measures to try to boost the economy.
Markets have also been encouraged by a recovery in oil prices as earlier this week, oil prices fell to their lowest level since 2003 – around $27 a barrel – after the International Energy Agency warned that oil markets could “drown in oversupply” in 2016.
However, on Friday the price of Brent crude was up more than $2 at $31.68 a barrel and US crude was also $2 higher, at $31.86 a barrel.
The prospect of colder weather in the US and Europe was being cited as one factor behind the rise.