The FTSE 100 index of Britain's leading shares ended up 0.96 percent on Monday to reverse some of the losses suffered last week after fears that global interest rates were headed higher.
The FTSE 100 ended 62.4 points higher at 6,567.5, having lost 2.4 percent last week, when benchmark US bond yields rose above 5.25 percent, hurting sentiment in stock markets. Miners were the standout sector, accounting for over 12 index points on the upside, helped by higher metal prices and a UBS note which suggested that merger and acquisition activity in the sector is set to continue.
Johnson Matthey added 4.6 percent, Rio Tinto gained 2.6 percent, BHP Billiton climbed 2.8 percent and Vedanta tacked on 2.6 percent.
Banks also featured on the upside with Barclays adding 1.5 percent as US hedge fund Atticus Capital urged the British bank to drop its 65 billion-euro bid for ABN Amro after buying a significant stake in Barclays.
"It's short-covering ... the odd bargain hunting as well," said Tom Hougaard, chief market strategist at City Index Markets. "In every single significant downturn we've had over the last four years, all last between two to three weeks ... In every single one of those cases you had a one or two day rally - so I dismiss this."
"We could still be in the midst of a really bad sell-off and just have a one-day relief," he added. And with little on the corporate and economic calendar, market direction was thin, as traders awaited UK consumer price inflation data on Tuesday.
Also on the upside, Centrica gained 2.2 percent on consolidation talk despite a spokesman for Russian gas group Gazprom saying the company was not interested in the British utility.
The stock had risen as much as 5 percent after Gazprom's deputy chief executive, Alexander Medvedev, said at the weekend that the Russian gas giant was nearing a deal to increase its market presence in Britain. Cadbury Schweppes added 3.1 percent, as traders said the stock had been oversold in recent sessions.
Engineering firm Smiths Group climbed 2.4 percent as traders cited vague talk of a stake-build in the company by a hedge fund. Smiths Group was not immediately available for comment.
Smiths announced on January 15 plans to return 2.1 billion pounds to shareholders by means of a B share scheme and a share consolidation. The plan was part of the sale of its aerospace business to General Electric.
Pharmaceuticals also provided support, with GlaxoSmithKline climbing 1.9 percent after researchers said on Saturday the drugmaker's experimental platelet-boosting drug eltrombopag has produced further positive results in patients with idiopathic thrombocytopenia purpura (ITP). Elsewhere in the sector, Shire added 2.4 percent.
"Forget about how much we are up or how much we are down," said City Index Markets' Hougaard. "We are smack bang in the middle of where we've been for the better part of three or four months.
"We have been trading in a 4 percent range since April. I don't read anything into this." Among losers, Rexam topped the board, down 3.3 percent after the world's biggest drinks-can maker agreed to buy the plastic-packaging business of Owens-Illinois Inc for $1.83 billion in cash, as it moves to target the fast-growing market in packaging medicines.
Vodafone lost 1.3 percent after moves by activist shareholder ECS seeking a return of 38 billion pounds ($75 billion) from the group faced difficulty getting the market's support, analysts and investors said.
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