The export-oriented FTSE 100 was up 1.5%, after hitting March lows on Monday, while the more domestically oriented FTSE 250 snapped a three-day losing streak, jumping 2.4% by 0853 GMT.
U.S. stocks rallied on Monday after the weak manufacturing data hit Treasury yields and the dollar, spurring a global rally.
"U.S. manufacturing numbers were a bit of a disappointment. So, now there is increasing speculation that the Fed might look to do a pivot or may at least pause interest rate hikes for a time," said David Madden, market analyst at Equiti Capital.
Risky assets have taken a hit this year as central banks globally undertake monetary tightening to tame surging inflation, at the risk of causing a recession.
In London, stocks had a choppy start to the final quarter on Monday. A "mini-budget" last month proposed unfunded tax cuts, roiling markets globally. However, Finance Minister Kwasi Kwarteng reversed the plan and is now expected to publish his medium-term fiscal plan later this month -- earlier than previously planned.
"The best gauge of sentiment is the British pound now rather than equity and it is at a much better value now," added Madden.
The sterling was up 0.5%, while the 10-year gilt yields also fell.
Legal & General Group jumped 5.1% after saying it would continue to support pension fund clients buffeted by sudden interest rate hikes. It added that it had not experienced difficulty in the aftermath of the "mini-budget".
Retailers were led higher by a 9.9% jump in Greggs after its same store sales rose 9.7% year-on year, despite a worsening cost of living squeeze.
Energy stocks advanced 0.3%, supported by higher crude prices on prospects of supply cuts by the OPEC+.
(Reporting by Johann M Cherian in Bengaluru; editing by Uttaresh.V)
By Johann M Cherian