The FTSE 100 jumped higher on the back of improved global sentiment, as trade tensions between the US and China appeared to soften.
The index continued its return to growth after Donald Trump’s tariff threats dented London stocks last week.
London’s leading index closed up 56.56 points to 7,353.51 points as investors gained confidence.
Fiona Cincotta, senior market analyst at City Index, said: “Investors’ anxiety over the US-Chinese trade war is easing, and risk appetite is cautiously returning.
“The weaker pound and stronger oil prices also offered support to the FTSE, which lagged only behind the trade sensitive Dax.”
The European markets have been aided by strong performances by industrials, with a surge by ThyssenKrupp driving growth in Germany.
The German Dax jumped by 1.74% and the French CAC rose by 1.37%.
Speculation around Theresa May’s future as Prime Minister, with reports suggesting the Conservative Party 1922 are setting out a timetable for her departure, has dragged down on the value of the pound.
The pound fell 0.38% to 1.280 versus the US dollar and 0.1% to 1.145 versus the euro.
In stocks, Thomas Cook shares tumbled after it slumped to a £1.5 billion half-year loss and issued a fresh profit warning as Brexit uncertainty sees customers delay their holiday plans.
Pre-tax losses widened from £303 million a year earlier and the holiday operator warned second half earnings would be hit amid tough trading over the key summer period.
Shares in the company were down 3.4p at 19.6p.
Elsewhere, luxury fashion house Burberry also saw shares slide after underlying pre-tax profits remained flat at £443 million over the year to March 30, while revenues dipped 1% to £2.7 billion.
The group, famous for its trademark trenchcoats and signature brown check, reported a 2% rise in like-for-like sales, with “mid-single digit” growth in the UK thanks to higher tourist spend over the final six months.
Shares in the firm closed down 113.5p at 1,836.5p.
Lloyds Banking Group closed marginally higher after the lender saw more than 8% of investors vote against the bank’s pay proposals for bosses at the lender’s annual shareholder meeting in Edinburgh.
Ahead of the AGM, Lloyds had also announced plans to pay quarterly dividends from next year.
Shares in the company closed up 0.5p at 61.5p.
Shares in National Grid slid after the firm reported a plunge in annual profits as it felt the impact of two abandoned nuclear projects and storms throughout the year.
Shares in the company, which has faced calls from the Labour Party to bring it under public ownership, closed down 28.3p at 814.5p.
The price of oil increased for a third straight session as tensions in the Middle East remained elevated.
The price of a barrel of Brent crude oil rallied by 1.5% to 73 US dollars.
The biggest risers on the FTSE 100 were Hargreaves Lansdown, up 90p at 2,433p, Experian, up 81p at 2,120p, Hiscox, up 56p at 1,660p, and Admiral Group, up 68p at 2,120p.
The biggest fallers on the FTSE 100 were Burberry, down 113.5p at 1,836.5p, National Grid, down 28.3p at 814.5p, United Utilities, down 25p at 777p, and Severn Trent, down 61p at 1,905.5p.