The FTSE 100 closed up 25.20 to 5,066.81 on Friday, but ended the week down 5.62pc, with �78bn knocked off the value of Britain's blue-chip companies. While the index closed higher, it had fallen as much as 1.6pc earlier in the day, dropping through the pyschologically important 5,000 mark.
The comments came amid speculation that eurozone policymakers were considering boosting the size of the region's bail-out fund, the European Financial Stability Facility (EFSF), and rumours that France could step into help its banking system. The G20 communique had earlier called on the eurozone to "increase the flexibility of the EFSF, to maximise its impact".
The FTSE 100's move higher was mirrored across Europe, with the Dax in Frankfurt up 0.63pc and France's CAC 1.02pc higher. In the US the Dow Jones was little changed at 10,727.00.
Any optimism came towards the end of another difficult day in which concerns were heightened after the European Commission denied a report that it was considering recapitalising the region's banking system. "There is no big European plan to recapitalise banks," said Olivier Bailly, an EC spokesman, pointing out that eurozone banks have already received ?420bn (�367bn) in capital since 2008.
The comments came as Evangelos Venizelos, Greece's finance minister, was forced to issue a statement after newspaper reports claimed he had said an orderly default was one of three options open to the country. "Greece has taken the final decision to do everything in its power in order for all the European Council decisions... to be implemented fully," he said. "All other discussions, rumours, comments and scenarios... do not offer good service."
In a further blow for markets, Royal Bank of Scotland analysts issued a report in which they forecast that Europe would move into recession early next year. Investors continued to liquidate positions in commodities from metals to oil, moving to safe haven government bonds. The yield on German bunds fell to a new record of 1.64pc, with US Treasuries also setting a new low of 1.7pc.
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