Asian and European equities rallied on Friday despite news of surging US inflation, while the pound dipped on uncertainty over Britain's controversial budget.
The yen held around three-decade dollar lows as rampant US consumer prices cemented expectations of more hefty Federal Reserve rate hikes.
London stocks rose as British finance minister Kwasi Kwarteng flew back one day early from a key IMF gathering in Washington, stoking speculation of another U-turn over his debt-fuelled measures that sparked recent markets turmoil. He was also reported to have lost his job.
The pound dipped before the Bank of England ends later on Friday its emergency bond-buying policy that sought to stem the turbulence.
'Astonishing rebound'
"Markets staged an astonishing rebound despite a hotter-than-expected inflation report in the United States," said Interactive Investor analyst Richard Hunter on the broad-based gains.
"The reasons... were not immediately clear, although traders pointed to a technical rebound as investors unwound defensive positions which had been in place ahead of the inflation report."
US CPI inflation data showed prices rose last month at a faster clip than expected, despite this year's series of Fed interest rate hikes which have fanned fears of a global recession.
The month-on-month reading came in double estimates, while core inflation – which strips out volatile energy and food prices – was also elevated.
The figures sparked a sharp plunge on Wall Street but the selling quickly reversed, and all three main indexes finished the day with gains of more than two per cent.
"It could be argued that yesterday's hotter-than-expected CPI reading may well have been partially priced in as far as stock markets were concerned," noted CMC Markets analyst Michael Hewson.
It could be argued that yesterday's hotter-than-expected CPI reading may well have been partially priced in as far as stock markets were concerned- CMC Markets analyst Michael Hewson
Investors are awaiting quarterly results on Friday from US banks Citigroup, JPMorgan Chase and Wells Fargo.
The updates "could offer some important insights into how US consumers are spending their money", added Hewson.
Markets meanwhile remain on tenterhooks that the UK government was set to perform another U-turn on last month's tax-slashing budget.
Speculation had been swirling that British Prime Minister Liz Truss could sack Kwarteng over the badly-received budget, with the BBC reporting that he had, in fact, lost his job.
The pound had rallied sharply on Thursday on reports the new government could row back on more tax-cut pledges.
Truss has insisted that there would be no more U-turns, after she was previously forced to scrap a plan to cut tax on the richest earners.
Meanwhile, the yen's weakness comes from the Bank of Japan's refusal to lift interest rates – citing a need to support the economy – just as the Fed presses ahead with hefty hikes in borrowing costs.