British blue chip stocks gained 5.2 percent on Friday as oil shares bounced on recovering crude prices, while UK pharmaceuticals forged higher as investors bet on upbeat earnings from their Swiss peers next week. The FTSE 100 closed up 201.6 points at 4,063.0 points, ending 3.3 percent higher on the week.
The index shed more than 20 percent the previous week, its worst week since the 1987 stock market crash. The week's gains follow weeks of brutal losses on world stock markets in the worst financial crisis since the Great Depression.
"While Friday's strength is encouraging, markets still remain nervous about the overall outlook for the months to come so we should not be surprised to see some more hair-raising swings before the month is out," said David Jones, chief market strategist IG Index.
A rolling credit crisis has knocked about 37 percent off the FTSE 100 so far this year. "We're not out of the woods yet but at least the trees have stopped collapsing around us," said Henk Potts, equity strategist at Barclays Stockbrokers. "But there's considerable unease about the prospects for the global economy."
Stocks bounced higher across Europe, shrugging off weak and skittish trade on Wall Street. Energy shares led the advance, with BP and Royal Dutch Shell rising 8.6 and 8.4 percent, respectively. Pharmaceuticals were also standout gainers, with GlaxoSmithKline 8.6 percent higher, Shire up 7.4 percent and AstraZeneca up 5.2 percent as investors anticipated strong results from peers Swiss Novartis and Roche next week.
Miners reversed earlier losses, taking heart from robust gains in copper prices. Anglo American rose 12.3 percent, BHP Billiton added 10.4 percent and Rio Tinto ended 9.8 percent higher. Battered banks were broadly higher, with investors slightly more positive on the struggling sector.
Royal Bank of Scotland added 5.5 percent, Barclays gained 3.5 percent and HSBC put on 3.3 percent. But HBOS shed 4.9 percent. The Chairman of Britain's financial regulator, Adair Turner, said on Friday that the global banking system is past the danger of systemic meltdown following government intervention, but there will still be economic consequences.
Prudential lost 9.3 percent after the Financial Times said the company was forced to deny planning an imminent rights issue as worries about the global economy spread to insurers. Aviva tumbled 12.7 percent, topping the FTSE 100 fallers. Intercontinental Hotels fell 0.5 percent after J.P. Morgan cut its price target on the company and other European hotel stocks. UK property shares fell to their lowest level in almost 5 years.
Property services firm Savills warned of lower profits and worries over rent prospects grew after data this week fanned recession concerns and showed Britain's commercial property downturn was accelerating. The FTSE 350 Real Estate index fell as much as 4.9 percent to 2,297 points - its lowest level since December 2003, Reuters data showed. Hammerson plunged 7.1 percent, while British Land and Land Securities fell 3.3 and 1.2 percent respectively.
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