Strong mining stocks and a confident start to trading in New York helped the FTSE 100 Index close almost 2% higher today.
The improvement of 109.9 points to 6196 was the fourth gain in a row for the Footsie, which is now back at levels seen at the start of the year.
Sentiment was strong from the outset, with positive results from BHP Billiton setting an upbeat tone in the mining sector.
But investors were also cheered by developments on Wall Street, amid reports of a return to merger and acquisition activity. Deals have dried up in recent weeks because of the current tightness in credit markets.
The strong full year results from BHP Billiton, the world’s largest mining group, helped the sector gain by almost 6% overall, thrusting major players to the top of the risers board.
Lonmin was the top performer, up 7%, or 214p at 3177p, thanks to BHP’s results - showing a 35% rise in underlying profits to 13.7 billion US dollars (£6.9bn) - and the group’s positive outlook on commodity prices.
BHP rose 64p to 1365p, or 5%, while peers Antofagasta and Anglo American moved up 40.5p to 694.5p, and 148p to 2752p respectively.
Mortgage bank Northern Rock saw shares make a much-needed recovery, moving ahead 4%, or 26p to 728p on the back of takeover speculation after a note from Cazenove suggested HSBC could see the group as a good takeover fit.
Man Group, which has also been hit by market uncertainty, put back 23.5p at 481.5p while Invesco added 23p at 605p, a gain of 4%.
Supermarket giant Sainsbury added 15.5p to 530.5p as market rumours suggested the group may receive a sweetened offer from Delta Two, the Qatari royal family-backed fund that is stalking the chain.
The pubs sector also provided the market with cheer, after JP Morgan said a recent a fall in the share price of Punch Taverns had been overdone and that long-term prospects for the business remained strong.
Punch shares were ahead 6%, or 62.5p at 1039p, while fellow pub firm Enterprise Inns added 33.5p to 611p and Mitchells & Butlers rose 33.5p to 711.5p.
A number of stocks were impacted by going ex-dividend, meaning investors are no longer entitled to the most recent payment. Currys owner DSG International fell 1p to 159p and BT Group slipped 7p to 305p. On a weak day for the telecoms sector, Vodafone dipped 0.4p to 156p.
Meanwhile, shares in FTSE 250 transport group Stagecoach extended recent gains with a rise of 1.25p to 202.25p, after it said revenues in bus and rail operations had been stronger than expected.
Fellow second tier group Emap, the media firm and publisher, was also on the front foot, up 24p, or 3%, at 847p after press reports said the group’s sale process has not been derailed by the credit squeeze.
The biggest Footsie risers were Lonmin up 214p at 3177p, Rio Tinto ahead 209p at 3280p, Experian up 33p at 525.5p and Hammerson ahead 81p at 1307p.
The four fallers were Scottish & Southern Energy down 42p at 1385p, BT off 7p at 305p, DSG International down 1p at 159p and Vodafone off 0.4p at 156p.