Bumper business data has bounced the FTSE 100 out of the gloom in mid-morning, with rallying blue-chips led by fund manager Schroders on the back of several analyst upgrades.
In morning trade, the index of leading shares was up 0.66 per cent or 26.3 points at 4,055 points, reversing an early tumble to as low as 3,990 after an overnight rout on Wall Street prompted by yet more bleak manufacturing data.
However, the Chartered Institute of Purchasing and Supply's UK services purchasing managers' index for August showed a surprisingly strong index of business activity.
"This increases the hope that weak data in June and July was an aberration. The PMI surveys today and Monday were good, showing we are still growing in the service sector," said David Thwaites, European strategist at BNP Paribas
"But I don't think the rally will last. What goes on in the U.S. is critical and we can only continue up if we get a prop from the U.S. this afternoon," he added.
Wall Street futures were looking a little perkier, with the September futures contract for the Dow Jones industrial average up 0.6 per cent and the Nasdaq contract up 0.4 per cent.
Schroders was the biggest blue-chip gainer on the FTSE, up 5.8 per cent to 499 pence after Merrill upped its rating on the stock to "buy" from "neutral" and Lehman raised its price target to 594 pence a share.
Europe's largest airline British Airways is due to release traffic data for August later in the day and peer Air France may pile on more bad news for the industry when it reports later in Paris.