The FTSE 100 index rose 1%, recovering from early losses as AstraZeneca gained 4.4% after U.S. regulators approved its treatment against an aggressive type of lung cancer in previously untreated patients.

A weaker pound following a Fitch's cut to Britain's sovereign debt rating also helped the big dollar earners on the index.

However, the general mood was that of caution as investors were left wondering if the massive steps taken by policymakers over the pat weeks will be enough to shield global growth as many economists warn of a sharp economic slump.

The FTSE midcap index fell 1%, with shopping centre operator Hammerson sliding 22% to the bottom after it suspended its final dividend and said the outbreak would have a material impact on its earnings.

Adding to woes for domestic businesses, a senior medical officer said on Sunday some lockdown measures in Britain could last months and only be gradually lifted.

"I think the markets want to have hope, but the reality is there is still more pain to come in the short-term," said Louise Kernohan, investment director for UK Equities at Aberdeen Standard Investments.

The U.S. government passed a $2 trillion coronavirus relief bill last week, while the UK government's commitment to pay 80% of the wages of workers who are temporarily laid off, and monetary policy easing by major central banks, had sparked a bounce in global stocks last week.

Still, the FTSE 100 is still headed for its worst month in more than three decades and is down about 28% since hitting a peak in January.

Shares in aerospace suppliers Rolls-Royce, Meggitt and Senior fell between 12% and 14% after another bearish call from JPMorgan.

The U.S. bank, which assumes a 38% drop in global air traffic in 2020, cut earnings estimates for the sector, and expects credit rating firms including the S&P to downgrade Rolls-Royce to non-investment grade.

Travel stocks have taken a beating, as the fast-spreading coronavirus triggered lockdowns globally, forcing airlines, and cruise and travel operators to scramble for cash to survive.

The wider travel and leisure index <.FTNMX5750> fell 1.6%, with low-cost airline easyJet sliding 7.2% after revealing it had grounded its entire fleet and furloughed cabin crew for two months under a government job retention scheme.

"Within each sector, there will be relative winners and relative losers. The investors' job now is to choose the ones that will survive and hopefully will come out stronger after this - based on liquidity and balance sheet," said Aberdeen's Kernohan.

Battered shares in BP and Royal Dutch Shell gained even as Brent crude plunged to its cheapest in 18 years on fears about the economic hit from the pandemic as well as a price war between Russia and Saudi Arabia. [O/R]

By Sruthi Shankar and Devik Jain