The Ftse 100 Index touched 6,829.47 — its highest level since June 25 last year — before paring back gains to close up 15.66 points to 6,809.13.
Heavyweight financial stocks led the charge on the London market, with Barclays among the biggest risers after being handed an upgrade from neutral to outperform by Exane BNP.
Shares in Barclays stepped up 3.5% or 5.4p to 157.4p, with some investors feeling the post-Brexit rout on British banks was overdone.
Royal Bank of Scotland climbed 6.5p to 184.7p and Lloyds Banking Group lifted 1.4p to 54.6p.
Tony Cross, market analyst at Trustnet Direct, said: “It’s also worth noting that Lloyds and RBS — the two banks who still have significant state holdings — have been cheered through the day with that news of no fire sale by the government seemingly bolstering investor confidence.”
The price of oil surged 2.4% to $45.31 a barrel amid growing speculating that Opec may attempt to ward off a global supply glut by curbing output.
European markets continued to make gains on the back of last week’s better-than-expected employment data from the United States.
Germany’s Dax was up 0.6%, and the Cac 40 in France rose 0.1%.