European markets appeared to be banking on a resolution of the US budget crisis as they made further strong gains.
The FTSE 100 Index climbed 41.46 points to 6,549.11, while Germany’s Dax hit a new all-time high.
Nick Dale-Lace, senior sales trader at CMC Markets, said: “Either markets have absolute faith that politicians in the US will ultimately do the right thing, or have simply become numb to big macro shocks in the last few years, as we continue blindly onward and upward towards the deadline dubbed a ‘financial apocalypse’.”
Miner Rio Tinto was the stand-out performer, up 4.2 per cent or 131p at 3,215p after reporting record iron ore and coal output. The firm also said it is on course to hit targets in cutting exploration spending this year.
The general improvement in world markets ensured financial stocks were doing well, with Aberdeen Asset Management also on the risers’ board after a gain of more than 3 per cent, to 410.3p. Standard Life was 1.4 per cent higher at 361.5p.
Luxury goods group Burberry was the biggest faller in the FTSE 100 after its surprise announcement that chief executive Angela Ahrendts is leaving the firm. The shares declined almost 8 per cent, or 121p, to 1,464p even as the company revealed 17 per cent growth in underlying retail sales in the last half year.
Outside the top flight, shares in housebuilder Bellway lifted 5 per cent to 1,453p after it announced a 34 per cent jump in full-year profits.
It was also a significant session for Royal Mail, which began full trading on the London Stock Exchange after two days of conditional dealings. Shares gained another 14p to close at 489p, putting them almost 50 per cent ahead of the flotation price last week.