Some positive economic data out of China calmed Asian nerves, causing equities in the region to rise earlier in the day.
Europe took its cue from Asian strength, and US stocks also continued the recovery they started late on Wednesday when they "were able to climb out of a deep hole", as Charles Schwab analysts put it.
But analyst Michael Hewson at CMC Markets warned that there was no guarantee the recovery would last.
"For this rebound to gain further momentum we would need to see evidence of a softening of the rhetoric around trade, and a willingness on the part of both parties to dial back their current positions," he said.
There was little faith in such a scenario across trading floors, and safe haven assets such as bonds, gold and the yen remained in demand.
Oil prices rebounded, a day after slumping to seven-month low points on higher-than-expected US crude supplies, while bond markets gave up some of the previous day's sharp gains.
"It's safe to say investors are struggling to make up their mind at the moment," noted Craig Erlam, senior market analyst at Oanda trading group.
"On the one hand, the trade war is a significant downside risk to the global outlook but on the other, central banks are cutting rates around the world in a bid to halt the slowdown before it takes hold."
Equities tumbled this week after Beijing allowed the yuan to slide sharply against the dollar following US President Donald Trump's announcement that he would impose 10 percent tariffs on another $300 billion in Chinese goods from September 1.
But Beijing's move to then stabilise the yuan helped to ease investor fears.
China's central bank on Thursday set the currency's central parity rate above 7.0 against the dollar for the first time in 11 years.
Beijing does not want "a very sharp, sudden move weaker that could result in a big jump in capital outflow", said Julian Evans-Pritchard, senior China economist at Capital Economics.
"So they are trying to effectively manage the process and engineer a gradual depreciation," he told AFP.
Multiple rounds of tit-for-tat tariffs between the United States and China have hammered trade and raised concern for the health of the global economy.
Negotiators are set to reconvene in Washington in early September for another round of talks after last week's discussions in Shanghai, but hopes for an agreement are faint.
German sportswear maker Adidas on Thursday warned that "everybody will lose" if a currency war ignites between China, the United States and other countries, while reporting continued strong earnings in its second quarter.
Interest rate cuts this week by central banks in India, Thailand and New Zealand and weak German industrial data have underscored fears about economic growth being at risk around the world.
Markets now believe that key central banks will cut interest rates further to stave off, or at least alleviate, any coming recession, analysts said, warning however that they had limited opportunity to act.
London - FTSE 100: UP 0.7 percent at 7,246.77 points
Frankfurt - DAX 30: UP 1.0 percent at 11,767.53
Paris - CAC 40: UP 1.5 percent at 5,348.98
EURO STOXX 50: UP 1.3 percent at 3,353.74
New York - Dow: UP 0.4 percent at 26,109.87
Tokyo - Nikkei 225: UP 0.4 percent at 20,593.35 (close)
Hong Kong - Hang Seng: UP 0.5 percent at 26,120.77 (close)
Shanghai - Composite: UP 0.9 percent at 2,794.55 (close)
Euro/dollar: DOWN at $1.1191 from $1.1203
Pound/dollar: DOWN at $1.2109 from $1.2140 around 2100 GMT
Euro/pound: UP at 92.42 pence from 92.26 pence
Dollar/yen: DOWN at 106.10 yen from 106.23 yen
Brent North Sea crude: UP 96 cents at $57.19 per barrel
West Texas Intermediate: UP $1.38 at $52.37 per barrel