Banks gained 0.9 and are now up more nearly 2.5 percent since the previous session's lows, boosted by forecast-beating earnings from JPMorgan Chase and Goldman Sachs on Wednesday.

Appetite for banks was maintained despite hits to the profits of both Citigroup and Bank of America, while early selling pressure on Rio Tinto reduced dramatically throughout the day to lift the main weight on the index.

The heavyweight miner had been down as much as 5 percent after it announced a $14 billion non-cash impairment charge and the resignation of CEO Tom Albanese.

Rio closed only 0.5 percent lower, while Dutch technology company ASML turned a 7 percent fall into a 7 percent gain after its profit update. Such turnarounds scared off sellers in the market even before the Citigroup and Bank of America results, said Andy Ash, head of sales at Monument Securities.

"The reversal had already happened before the U.S. got in. I think it's more simply the way Rio and ASML behaved today," he said.

BUYING OPPORTUNITY

"There's not a lot of business behind it, but we saw a couple of stocks being hammered first thing in the morning and then suddenly they reversed. That's probably got people a little bit scared and they've followed it."

Rio benefited as several banks issued notes saying that the miner's dip provided a buying opportunity.

"The market will perceive today's write-downs and management changes negatively in the short term but that these will be positive for the stock and the sector longer term," analysts at Citi write in a note, upgrading the stock to "Buy" from "Neutral".

"We believe today's announcement could significantly realign Rio Tinto with shareholder interests through reduced M&A and reduced capex spend."

The FTSE 100 closed up 28.38 points, or 0.5 percent, at 6,132.36, its highest close since May 2008.

Few investors are expected to roll over their downside protection at tomorrow's options expiry, with 60 percent more puts than calls due to expire on the FTSE 100.

While this leaves the market vulnerable to a correction, few investors are willing to spend money on downside insurance on an index that has gained nearly 4 percent this year and has left 98.2 percent of put options worthless.

With so few people prepared to bet on the market falling, weakness such as that exhibited this morning is an opportunity to get into a rising market at slightly more affordable levels, said Robert Quinn, chief European equity strategist at Standard & Poor's Capital IQ.