Global markets took cheer after a key player pulled out of the race to head America's central bank, lifting hopes that the US will keep the printing presses rolling.
Former Treasury Secretary Larry Summers withdrew from the race to succeed Ben Bernanke as head of the US Federal Reserve - lifting the FTSE 100 Index 39.1 points to 6622.9 while the pound climbed to an eight-month high of US$1.59 as the greenback fell.
Markets believe that Janet Yellen, the new favourite to head America's central bank, may not be in favour of scaling back quantitative easing (QE) as aggressively as it appeared Mr Summers would be.
The next meeting of the Federal Reserve takes place this week, with members thought likely to vote for a modest tapering of asset purchases.
Fears of a more severe cutting back of the money-printing drive further down the track eased off after Mr Summers, seen as a sceptic on QE, stepped aside from his position as front-runner for the Fed role.
The prospect of billions of dollars continuing to be pumped into the US economy had the dual effect of lifting stocks and pushing down the dollar.
Joshua Mahony, research analyst at Alpari, said: "There is no surprise that the markets have taken to this move in a highly positive manner, given the fact that tapering would likely be more drawn out under Yellen than Summers."
Investors were also cheered by the agreement between Russia and the United States on Syria's chemical weapons, which pushes the prospect of a feared conflagration in the Middle East into the distance.
Germany's Dax and France's Cac 40 also climbed strongly on the positive sentiment, although the pound was flat against the euro at 1.19.
In London, airline stocks were among those high up the risers board on hopes that oil prices will ease on developments in the Middle East.
British Airways and Iberia owner International Airlines Group rose 10.3p to 325p and easyJet improved 31p to 1331p.
Barclays closed up 3.8p at 305.4p despite revealing it faces a £50 million fine from City regulators over fees paid to Qatari investors during its 2008 fundraisings.
Fashion retailer French Connection was 3% lower after it reported pre-tax losses narrowed only slightly from £6.3m to £6.1m.
Like-for-like sales in its UK and Europe outlets were down 4.5% in the half-year to the end of July, though founder and chief executive Stephen Marks noted "considerable progress" in the company's turnaround plan. Shares fell 1p to 32p.
Miner Fresnillo suffered the worst fall on the FTSE 100, plunging by 13%, or 153p, to 1045p on the prospect of a levy on the mining sector in Mexico.
The biggest risers on the FTSE 100 were Antofagasta up 33.5p to 883p, Standard Life 11.4p higher to 354.1p, International Airlines Group up 10.3p to 325p and Sage 9.7p higher to 360.4p.
The biggest fallers on the FTSE 100 were Fresnillo down 153p to 1045p, Eurasian Natural Resources 4.5p lower to 215.5p, Rolls-Royce 19p lower to 1106p and Tate & Lyle off 7p to 786p.