FTSE 100 closed around 46 points higher at 7,115 as US shares turned positive on the back of positive data.
The FTSE 250 also gained ground - up over 180 points at 19,567.
On Wall Street, the Dow Jones is up over 179 points, while the S&P 500 added over 34 points, but jitters over Trump's trade tariffs were putting a dampener on sentiment.
In the currency markets, the pound was up 0.17% against the Euro and up 0.34% against the US dollar.
Top gainer on Footsie was Smurfit Kappa Group (LON:SKG) , up 4.61% to 2,542p after heavyweight broker Goldman Sachs listed the company on its note covering the packing and paper industry.
It also hiked its price target for Smurfit Kappa to 3000p from 2700p.
On the losing front, Rentokil Initial (LON:RTO) was the biggest loser, shedding 4.22% to 261p.
The Footsie recovered from a dip lower to push modestly higher again in late afternoon trading, helped by a flat performance from the pound, as a weaker open from US markets proved no worse than feared despite trade war concerns and interest rate worries.
Approaching 3pm, the FTSE 100 index was up around 11 points at 7,081, back midway between the session peak of 7,104 and the day's low of 7,062.
In early trading on Wall Street, the Dow Jones was fairly volatile, losing around 85 points in the first half hour of trading to 24,451, with both the broader S&P 500 index and tech-laden Nasdaq composite also around 0.4% lower.
Last week's move by US President Donald Trump to propose hefty tariffs on metal imports has added to the caution currently surrounding equity markets, with the mood likely to remain nervous ahead of this week's UD jobs report and its implications for US monetary policy.
David Morrison, senior market strategist at GKfx.com said: "This Friday brings the latest update on US Non-Farm Payrolls. The consensus expectation is for an increase of 204,000 - just a rounding error above last month's 200,000 reading. But traders will really be focusing on Average Hourly Earnings.
"It was last month's +2.9% reading (way above the 2.6% expected) which triggered inflation fears and catalysed a jump in volatility and the stock markets' corrective sell-off.
"Another strong number will add weight to the argument that the Fed will opt for four 25 basis-point rate hikes this year."
Interserve PLC (LON:IRV) was a notable afternoon riser, up 7.5% to 59.5p after a newspaper report said a Scottish multi-millionaire is spearheading a rescue bid for troubled outsourcer.
The Daily Telegraph said pub entrepreneur Alan McIntosh is the serial investor behind Emerald Investment Partners, a private equity vehicle emerging as a key player in the FTSE 250 contractor's refinancing discussions.
The newspaper noted that Emerald has spent tens of millions of pounds scooping up Interserve's debt in the secondary market and said it estimated that it may now own as much as a third of Interserve's loans, making it one of the largest lenders.
Interserve, one of the biggest private contractors, providing security, probation, healthcare and construction services, employs 80,000 people, including 25,000 in the UK.
The company's stock market value has by plunged more than 75% since issuing profit warnings in September and October last year, leading it to be seen as the possible next Carillion - the contractor which went bust last month.
It also said it could breach loan conditions leading lenders to step in with ?180mln of short-term funding that runs out at the end of this month.
Around 2.25pm, the FTSE 250 index was 92 points, or 0.5% higher at 19.479, but the FTSE 100 index had lost its earlier gains, shedding 5 points at 7,064.
The FTSE 100 index remained modestly higher at lunchtime, with the pound more mixed, as investors looked to US markets to provide some fresh direction, although the underlying mood remained cautious given US trade war fears and uncertain Italian election results.
Around 1pm, the UK blue chip index was about 10 points firmer at 7,080, midway between the session high of 7,104 and the day's low of 7,062.
US stock futures were flat trying to shake off an earlier slide, despite worries over the impact of President Trump's proposed metal tariffs, announced last week.
Dow futures had tumbled more than 180 points earlier as investors assessed the potential for instability in one of Europe's biggest economies, after Italy's general election failed to deliver a clear outcome.
Connor Campbell, financial analyst at Spreadex, said: "Turning to this afternoon and the Dow Jones - which really suffered in the aftermath of Donald Trump's applecart-upsetting, trade warmongering comments on steel and aluminium tariffs - is keeping its cards close to its chest.
"The Dow is set to open flat just above 24500, with the afternoon's focus arguably on the Markit and ISM services PMIs; the former is forecast to rise from 53.3 to 55.9 month-on-month, but with the latter dropping from 59.9 to 58.9.
On currency markets, the pound was 0.1% firmer against the dollar at US$1.3810, but was flat versus the euro at 4.1226.
Earlier sterling had got a slight lift from news the UK services sector managed to grow at its fastest rate in four-months in February, with the purchasing managers index rising unexpectedly to 54.5 from 53.0.
Food retailers remained a focus in London after US broker Jefferies International said Tesco PLC (LON:TSCO), WM Morrison Supermarkets PLC (LON:MRW) and J Sainsbury plc (LON:SBRY) are all set to benefit from easing inflation and a more supportive consumer outlook.
Jefferies thinks Morrisons is best placed for outperformance as inflationary pressures ease after being the most affected by sterling weakness in its food business.
The broker raised its rating on the stock to 'buy' from 'hold' and lifted its target price to 265p from 225.50p, with the stock gaining 1.4% at 225.90p.
It also upgraded its rating for Tesco to 'buy' from 'hold' and hiked its target price to 250p from 208.60p. Jefferies left its rating on Sainsbury's at 'hold' but raised its target price to 270p from 256.50p
Sainsbury's shares added 0.3% at 253.7p, but Tesco slipped 0.1% lower to 201.90p as Britain's biggest retailer today completed its ?4bn takeover of wholesaler Booker Group.
Housebuilders were higher on Monday with UK prime minister Theresa May set to issue a call for the sector to "do their duty" and build new houses more quickly to meet demand.
Persimmon PLC (LON:PSN) led the FTSE 100 gainers in late morning trading, up 2.9% at 2,658p, while on the FTSE 250 Bovis Homes PLC (LON:BVS) gained 6.2% at 1,150p.
Launching a draft policy on planning laws designed to ease the country's housing shortage, May will say she wants 300,000 homes to be built per year - well above the 2017 level of around 217,000.
May calls on housebuilders to 'do their duty', demanding more homes https://t.co/CMFjSIwKnE pic.twitter.com/9znBt8kiiK
- Reuters Top News (@Reuters) 5 March 2018The planning reform will also look at ways local authorities can fast-track developments without eating into protected green spaces, and give nurses, teachers, and other key workers priority access to affordable housing.
The sector's gains provided support for the FTSE 100, but the index still eased back further from opening highs, ahead 15 points at 7,085, awaiting Wall Street's restart, with US stock futures volatile.
Although Monday's UK services PMI report was upbeat, the latest European data was less so, although equity markets continued to recover from early fears over a US trade war, a hung parliament in Italy, and uncertainty ahead of this week's European Central Bank policy decision.
Retail sales in the eurozone fell by 0.1% in January and December's number was revised slightly downwards.
Eurozone retail sales fall for second straight month https://t.co/jtvlFjeLuW via @WSJ
- Paul Hannon (@PaulHannon29) 5 March 2018Economists at ING commented: "While the outlook for consumption remains positive, some clouds are appearing on the horizon."
They added: "While we still expect healthy growth in sales for the months ahead, downward risks to the consumer outlook seem to be back on the menu."
However, despite the worries, European markets managed to hold their rally, with Germany's Dax 30 index up 0.9%, supported by a coalition deal for the country's government, and France's CAC 40 index gaining 0.4%.
In London, the FTSE 100 was ahead 20 points at 7,090, still holding off its opening high of 7.104.
The FTSE 100 index maintained its rally in mid-morning trading but eased off early highs as sterling pushed ahead following news of a better-than-expected report on the UK's dominant services sector.
At around 10.15am, the FTSE 100 index was up 21 points at 7.091, below the session peak of 7,104, having dropped over 100 points on Friday.
On currency markets, after early falls, sterling ticked up 0.2% versus the dollar at US$1.3825 and gained 0.1% against the euro at ?,?1.1220.
Joshua Mahony, market analyst at IG noted: "The UK services sector managed to grow at the fastest rate in four-months in February, with the PMI rising unexpectedly to 54.5 from 53.0.
"With construction and services sectors growing at an improved clip last month, this month has seen a marked improvement in outlook for the UK economy going forward. To a significant extent, these improved economic surveys provide a basis for action from the BoE given the elevated nature of UK inflation."
Purchasing managers report #UK #services activity picked up to a 4-month high in February from 16-month low in Jan (PMI up to 54.5 from 53.0 in Jan), helped by the strongest rise in new business since May 2017. Easing back in input #prices & #prices charged.
- Howard Archer (@HowardArcherUK) 5 March 2018Mahony also noted: "Early losses have been quickly erased across Europe this morning, as the uncertainty caused by Sunday's hung parliament in Italy did little to move the dial outside of the FTSE MIB."
The Footsie managed early gains after posting sharp declines on Friday, helped by a slightly easier pound, bucking weakness in other European markets as US trade war fears, uncertainty over interest rates, and a hung parliament in Italy all took their toll.
Around 8.30am, the FTSE 100 index was about 30 points higher at 7,100, having dropped nearly 106 points on Friday.
But in Europe, Germany's Dax 30 lost 0.4% and France's CAC 40 was down 0.2%, with US stock index futures also pointing lower.
Rebecca O'Keeffe, Head of Investment at interactive investor commented: "Global equity markets are fragile, and investors are wary as the increasing rhetoric over the weekend on tariffs and a potential escalation of a full-blown trade war make it possible that things could get very ugly very quickly.
"History has not been kind to investors during periods of protectionism and recent tweets suggest that President Trump is leaning in rather than stepping back from threats to unleash a global trade war."
She added: "The major headache that the EU faces on trade is not the only issue facing European investors this morning as Italy looks to have taken a step to the right and moved towards populism and change. "
"Against this negative backdrop, investors can only be grateful that German coalition talks finally reached a conclusion, with Angela Merkel managing to hold on to her position as long-serving Chancellor, albeit in a fragile alliance," O'Keefe concluded.
In London, however, supermarket giant Tesco PLC (LON:TSCO) led the way higher, up 1.9% at 205.9p as Britain's biggest retailer finally completed its ?4bn takeover of wholesaler Booker, boosted by an upgrade in rating from Jefferies International.
The US broker raised its rating for Tesco to 'buy' from 'hold' and also made the same move on its blue-chip peer Wm Morrison Supermarkets PLC (LON:MRW) which gained 1.5% at 226.1p.
Union Jack Oil PLC (LON:UJO) has increased its stake in the drill-ready Biscathorpe prospect ahead of an exploration well in mid-2018. The deal was agreed in tandem with Humber Oil & Gas, a private company, which is teaming up with Union Jack through a new commercial tie-up focussed on acquisitions.
Mobile app distribution and monitoring specialist appScatter Group PLC (LON:APPS) has signed its first major partnership since listing on AIM last September. App advertising network Airpush will promote appScatter's platform to its clients in return for 10% of the revenues generated by the collaboration.
Foreign currency movements have put a dent in the earnings of pharma services provider Ergomed PLC (LON:ERGO), spoiling "a year of exceptional growth".
Results for 2017 came in ahead of expectations at BATM Advanced Communications Limited (LON:BVC) in what the company termed a milestone year for the group.
Abzena PLC (LON:ABZA) has announced that a settlement has been reached with Stanford University in connection with the claims against biopharmaceutical development and manufacturing company PacificGMP which the UK firm acquired in 2015. Stanford University had filed a claim against PacificGMP for US$3mln plus damages in the Superior Court of the State of California in the County of San Diego on August 6, 2017.
Metminco Limited (LON:MNC) is raising A$5.3mln via a A$5.1mln rights issue and A$190,000 placing. The money raised will be used to fund exploration on the company's Colombia gold properties. A restructuring of the board is also underway.
Test work at the Mino do Barroso lithium project in Portugal undertaken by Savannah Resources PLC (LON:SAV) has delivered highly encouraging results. Recoveries are likely to be good and Savannah chief executive David Archer has professed himself "delighted" with the results.
Rambler Metals & Mining (LON:RAB) has revealed plans for a 20-year mine life at the Ming copper and gold project in Newfoundland. Reserves mined out in the past two years have been replenished, and while the resource base has declined, grades have improved significantly. Net pre-tax cashflow is likely to come in at US$195mln.
ClearStar Inc. (LON:CLSU) said that its background check solution has become one of the first to achieve automatic integration of background checking into recruitment processes. The AIM-listed screening service provider said that its new automated integration solution will allow recruiters to select a stage in the recruitment process at which a background check will auto-initiate without the need for human intervention.
Telit Communications PLC (LON:TCM), the global enabler of the Internet of Things (IoT), has appointed Miriam Greenwood and Shlomo (Momo) Liran as non-executive directors with immediate effect. It said Greenwood will also chair the group's Remuneration committee.
Goldplat PLC (LON:GDP), the AIM-quoted gold producer with international gold recovery operations located in South Africa and Ghana and a gold mine in Kenya, announced that it will host a shareholder conference call at 12pm UK time on Friday 9 March 2018.
Silence Therapeutics PLC (LON:SLN), a leader in the discovery, delivery, and development of novel RNA therapeutics for the treatment of serious diseases with unmet medical need, announced that its chief executive officer, Ali Mortazavi will present at the Cowen 38th Annual Health Care Conference on Tuesday, 13 March, 2018 at 10:30am EDT in Boston, MA.
The FTSE 100 index is expected to rally at the start of a new week following sharp declines on Friday despite subdued Asian markets today as US trade war fears add to uncertainty over interest rates, with London helped by a slightly easier pound.
Spread betting firm CMC Markets expects the UK blue chip index to open around 33 points higher at 7,103, having dropped nearly 106 points on Friday.
In pre-weekend trading on Wall Street, the Dow Jones Industrials ended off lows, albeit still down nearly 71 points at 24,538, but the broader S&P 500 index managed to close in positive territory as investors considered the implications of possible US tariffs on metal imports.
On Thursday, President Trump said he plans to impose a 25% tariff on steel imports and 10% on aluminium without exemptions for any countries, and at the weekend, threatened European automakers with a tax on imports if the European Union retaliates against his plan.
Asian markets were weak today on worries over a possible trade war, and with interest rate hikes still also a concern ahead of the latest European Central Bank meeting on Thursday and, more importantly, Friday's US February jobs report, the strength of which last month sparked the start of a major sell-off in global equities.
On currency markets, sterling ticked lower against the dollar even after a report that said UK businesses grew at their fastest rate in more than two years in the three months to February, despite Brexit uncertainty, according to the Confederation of British Industry.
But the pound was a touch higher against the euro as traders continued to digest Friday's speech from prime minister Theresa May setting out her vision for the path to Brexit.
The European single currency was weaker ahead of this week's ECB meeting and following an uncertain result in the Italian elections at the weekend which will see the euro-sceptic Five Star Alliance hold the balance of power.
On the corporate front, newspaper publisher Trinity Mirror PLC (LON:TNI) will release its final results on Monday, days after completing the acquisition of the Daily Express and Daily Star newspapers from Richard Desmond's Northern & Shell, although news of a Competition and Markets Authority probe and a 'hold separate order' into the deal on Friday somewhat soured any celebratory mood.
In a statement then, Trinity Mirror said It "continues to believe that there will be no reduction in media plurality as a result of the Acquisition, as each newspaper brand will continue with its current editorial positioning, and that there will not be any detrimental impact on competition as a result of the Acquisition."
In its last trading update, accompanying the takeover news on 9 February 2018, the newspapers group said it anticipates its adjusted results for 2017 to be marginally ahead of consensus forecasts, while group revenue on a like-for-like basis is expected to fall by 9% year-on-year, broadly in line with the 9% decline it saw in the first half.
Consensus forecasts are for Trinity Mirror's 2017 pre-tax profits to be ?119mln, with total revenue forecast at ?622mln.
Trinity Mirror also said then that its 2018 performance so far had been in-line with market expectations, however, investors will be seeking comments on plans for the Northern & Shell titles, particularly given the CMA probe, and following recent news of the departures of the editors of both the Daily Express and the Daily Star.
Meanwhile, full-year results from Ultra Electronics PLC are hoped to make better reading than its fourth-quarter profit warning following a reassuring update at the start of January.
The defence contractor said then that 2017 revenue was expected to be over ?770mln and underlying operating profit just over ?120mln, while, more importantly, cash conversion was above 90% which beat the hoped-for 80%.
Many had feared much worse following weak cash generation in the first-half and then the profit warning and departure of Ultra's CEO in the fourth-quarter.
With Doug Caster at the helm as the FTSE 250-listed firm's executive chairman, any news about the search for a new CEO will be keenly sought.
Housebuilders could also be a focus in London after Theresa May demanded the construction of more new homes in the UK, calling on the sector to "do its duty".
Significant events expected on Monday March 5:
Finals: Trinity Mirror PLC (LON:TIM), Ultra Electronics Holdings PLC (LON:ULE), BATM Advanced Communications Ltd (LON:BVC), Microsaic Systems PLC (LON:MSYS)
Interims: Abcam PLC (LON:ABC), MySale Group PLC (LON:MYSL)
Traffic stats: International Consolidated Airlines Group PLC (LON:IAG), Wizz Air PLC (LON:WIZZ)
Economic data: UK services PMI; US non-manufacturing ISM; US services PMI