The FTSE 100 snapped out of a three-day losing streak amid signs some of the clouds over the banking sector sparked by Deutsche Bank's problems were beginning to clear.
The UK blue-chip index rose 64 points, or 0.9%, to 6,871, helped by a boost to sentiment from a rise in Deutsche Bank (DBKGn.DE) shares from lows.
Deutsche Bank rose 2.1% after Monday's 7.5% tumble and sideways trading yesterday. The move came after chief executive John Cryan dismissed claims the bank had sought German government help to pay a $14 billion US penalty (£10.8 billion) over the sale of mortgage products in the run-up to the financial crisis.
Investors also welcomed the bank's sale of its Abbey Life insurance arm to insurer Phoenix (PHNX), which rose 3.3% to 866p on the news.
'Deutsche Bank is continuing to dominate the markets this Wednesday, though this time the German firm seems to be dragging the European indices higher,' said Connor Campbell, financial analyst at Spreadex.
Tui (TUIT) also made gains, up 2.4% at £15.36 as the holiday company lifted profit guidance for the year.
Banks were in the ascendancy on the Deutsche Bank relief, including Royal Bank of Scotland (RBS), 1.3% higher at 176.8p after agreeing a $1.1 billion (£846 million) settlement with US authorities over mortgage mis-selling.
Gary Greenwood, analyst at Shore Capital, said the payment 'had already largely been provided for' and so should not have an impact on profit estimates.
Among the handful of FTSE 100 stocks in the red was Sainsbury's (SBRY), down 3% at 243.4p after the supermarket reported another drop in sales and said it did not expect competitive market conditions to ease imminently.
'Food deflation continues to bite hard on the supermarkets in an extremely competitive environment,' said Laith Khalaf, senior analyst at Hargreaves Lansdown.
'Sainsbury's is getting more items passing through the checkouts but the price of those goods is still falling, and the net effect is still falling sales in pounds and pence.'
The German postal giant's £243 million deal for the UK postal operator will be celebrated by big UK Mail shareholders Tom Dobell, manager of the M&G Recovery fund, Alex Wright, Citywire A-rated manager of the Fidelity Special Situations and UK Smaller Companies funds and Fidelity Special Values (FSV) investment trust.