Britain's leading share index rose 1.4 percent on Monday, as a U.S. plan to purge banks of up to $1 trillion in toxic assets boosted investor confidence, lifting commodity stocks and financials.
By 1128 GMT, the FTSE 100 index was 54.65 points higher at 3,897.50. The blue-chip index gained 6.3 percent last week and closed 25.92 points higher at 3,842.85 on Friday, but is still down 11.9 percent this year.
The U.S. government is putting in as much as $100 billion from its bailout fund in an attempt to coax private investors to buy up toxic assets worth up to $1 trillion from debt-ridden banks.
"It (U.S. bank plan) has really had a positive impact on the UK market," said Richard Hunter, head of UK equities at Hargreaves Landsdown.
"There has been a fairly broad brush mark up at the moment in anticipation of there actually being some meat on the bones. It's very much an opportunity for the U.S. government to nail down what the exact details of the plan are going to be," Hunter said.
Oil majors lifted the index as crude rose towards $53 a barrel, continuing its fifth week of gains.
Royal Dutch Shell and BP rose 2.3 and 1.5 percent, respectively. BG Group was up 2.6 percent, also supported by news the oil company had acquired 70 percent of Australian coal seam gas producer Pure Energy.
Financials made broad gains, led by Barclays which rose 9.9 percent after news the bank is offering to finance the purchase of its iShares fund unit.
HSBC, Standard Chartered Lloyds Banking Group and Royal Bank of Scotland were up between 2.9 percent and 6.3 percent.
COMMODITY BOOST
Miners were helped by a surge in the copper price to its highest in over four months on evidence of robust Chinese import demand and investor optimism over the U.S. bank plan.
Rio Tinto, Anglo-American and BHP Billiton were up between 2.7 percent and 7.3 percent. Xstrata was up 2.5 percent after the mining company said acquisition opportunities are developing in the mining sector, the Wall Street Journal reported.
Life insurers were also buoyant as sentiment towards the sector improved following broadly reassuring full-year results from the main industry players since the start of March.
Old Mutual was the top FTSE 100 riser, up 10.3 percent, while Legal & General, Aviva, Prudential and Friends Provident added between 2.8 percent and 3.9 percent. However, Standard Life fell 1.2 percent.
Shares in Vodafone rose 0.5 percent after it announced a European network deal with Spain's Telefonica.
Travel and leisure companies fell with Thomas Cook down 2 percent. Shares in Europe's biggest travel firm TUI Travel fell 1.8 percent while shares in Whitbread, Britain's biggest hotel operator, fell 1.1 percent.
Shares in utility company Centrica fell 1.9 percent following newspaper reports on Sunday the company would meet executives of Venture Production on Monday to discuss a takeover of the UK independent oil and gas firm.
