The main All Share Price Index closed at 7,317.17, up 1.44 percent (103.84 points) while the more liquid Milanka index rose 0.84 percent (56.02 points) to close at 6,747.35, according to stock exchange provisional figures.
Turnover was 1.6 billion rupees.
Free Lanka Capital Holdings, a recently listed stock that fell to its offer price of 5.
0 rupees Wednesday, was actively traded and closed flat at 5.10.
E-Channelling, a listed dotcom that enables patients to make appointments with doctors over the internet, rose 40 cents to 3.50 rupees. The company has announced it formed a joint venture with a British firm to diversify into BPO work.
Lanka Aluminium Industries was heavily traded, closing at 76.60 rupees, up six rupees.
"The Colombo bourse ended its losing streak today with a significant bounce back to the green terrain," Lanka Securities said in a report. "However, bounce back was supported by thin turnover."
Index heavyweight John Keells Holdings rose 3.60 to close at 283.60 rupees with a single crossing or private deal of 84,500 shares at 280 rupees each.
Lanka Securities said Lankem Ceylon was the top contributor to the turnover followed by Nation Lanka Finance and Aitken Spence Hotels.
SC Securities said in a report the market could rally during the next four week period with the release of corporate earnings.
"We believe the market out look remains positive taking into account the low interest rate regime and the prospective robust growth in earnings of corporates. We advice our clients to capitalize on the prevailing bearish sentiment by picking stocks that are fundamentally sound and attractively priced."