Shares in London were around 1.7% higher and sterling recovered slightly from a 31-year low.
The 100 share index was up 112.31 in morning trade to 6,575.90.
The pound rose 0.40% against the dollar to $1.2982 and was 0.54% higher against the euro at €1.1710.
Investors were reassured by strong economic data from the US on Wednesday and by expectations that interest rates will remain low for quite some time to come.
US service sector hit a seven-month high in June as new orders surged and companies hired more.
Despite a sharp sell-off after the Brexit vote, the FTSE 100 is up more than 3% since its close on June 23. However, it is down around 10% in dollar terms as the slump in sterling to a 31-year low has reduced the dollar value of the market.
While there were some tentative signs of recovery in riskier assets, investors were still on edge over the fallout from the Brexit vote which helped extend a rally in gold prices.
The precious metal is trading near its highest price in more than two years. Gold tends to perform well when investors are worried about the performance of riskier assets like equities.
In a busy company announcement session, shares in Marks and Spencer were down 0.9% after it reported a steep fall in sales.
AB Foods, owners of Primark, saw shares rise 8.8% to be the biggest gainer on the FTSE.
It said it was sticking to plans to expand its Primark chain across Europe and the US, and was optimistic about continued growth despite uncertainty created by Brexit.
Sports Direct shares rose 10% despite a fall of 15% in annual profits as a result of bad publicity about working conditions.
Late on Wednesday, the latest Federal Reserve minutes were released, showing that prospects of an interest rate hike have diminished.
This soothed investors who had feared that a rise in interest rates may hinder prospects for economic growth.
The US central bank’s last meeting in June took place before the UK’s EU referendum.
However policymakers were concerned the vote would heighten global market uncertainty and potentially hurt the US economic outlook.