A clutch of insurance stocks helped drive the market higher after an update from Friends Provident cheered the sector.
The stock was the highest top flight climber after saying an increase in business from independent financial advisers helped it boost UK sales by a fifth - leading to significant gains by rivals such as Aviva and Legal & General.
The momentum helped the FTSE 100 close 59.5 points higher at 4861.2, as it clawed back ground lost last week.
With first quarter UK sales up to £88 million, from £74 million last time, Friends' shares stood four per cent higher, lifting 61/2p to 167p. Legal & General and Aviva also advanced two per cent each, up 3p and 121/2p to 1071/4p and 6011/2p respectively, and Royal & Sun Alliance added 3/4p to 761/4p.
Takeover talk also fuelled the gains as speculation over B& Qowner Kingfisher made the stock the second highest Footsie climber. Kingfisher gained three per cent or 81/4p to 2533/4p, after a broker said weekend reports that private equity groups were considering bids could be near the mark.
The mood in the City was more upbeat than that across the Atlantic, where the Dow was broadly flat ahead of an announcement on US interest rates.
In London, Shell lifted 11/2p to 471p as investors welcomed news that it had reached a long-term gas exploration and development agreement with Libya's National Oil Corporation. It marks the company's first major project in the country for 30 years.
Rival BP also advanced 41/2p to 5381/2p despite a slight fall in the cost of a barrel of US light crude to just above $50.
Elsewhere, Marconi shares recovered some of their recent weakness, gaining seven per cent after it announced it was considering "all strategic options". With a sale of the business seen as an increasing possibility, the stock rose 191/2p to 281p.
Shares in discount clothing retailer Matalan also lifted after reports said it was likely to sell jeans business Lee Cooper. The stock put on two per cent or 4p to 193p.
Food producer Dairy Crest, whose brands include St Ivel Gold, added 11/4p to 4371/4p after saying it was in advanced talks to buy the dairy operations of Midlands Co-operative Society which produces more than a million pints of milk a year.
Hotel Corporation, which partowns a string of four star hotels cheered half a penny to 1291/2p.
Biggest risers: Friends Provident up 61/2p to 167p, Kingfisher added 81/4p to 2533/4p, Cadbury Schweppes up 17p to 542p and ICI added 8p to 2593/4p.
Heaviest fallers: ITV down 2p to 119p, Yell off 51/2p to 3953/4p, BSkyB down 7p to 533p and National Grid Transco fell 51/4p to 5091/2p.