London's blue-chip share index closed at its highest level for more than a month yesterday as mining stocks surged on relief over China's decision not to raise interest rates
The FTSE 100 Index added 47.8 points, or 0.8 per cent, to close at 5,860.75, while markets worldwide also made gains due to cheer over China.
There had been fears Beijing would hike rates after Chinese inflation jumped to a 28-month high of 5.1 per cent.
However, investors were relieved that an annual economic meeting ended on Sunday with just a pledge to control inflation while shifting the economy toward more stable, balanced growth.
Henk Potts, equity strategist at Barclays Wealth, said: "I think there's a bit of short-term relief that despite the high inflation numbers, China's authorities have yet to raise interest rates, although one suspects it could only be a matter of time before that happens."
Wall Street's Dow Jones Industrial Average rose after opening, while France's Cac-40 lifted 0.9 per cent.
But sterling suffered a difficult session after Bank of England deputy governor Charles Bean suggested further monetary easing was possible. The pound fell to €1.19 and was down against most major currencies.
Among stocks, the top flight risers board was dominated by miners as Kazakhmys climbed 63p to 1,592p and silver firm Fresnillo cheered 61p to 1,594p.
Household goods giant Reckitt Benckiser was also on the rise, up 2 per cent or 64p to 3,573p, as news of its deal to buy India's Paras Pharmaceuticals was taken well.
Analysts praised the acquisition for expanding Reckitt's market share in such a key emerging market.
The FTSE 250 Index was dominated by merger and acquisition activity in the oil and gas services sector.
Wellstream backed an 800 million takeover offer from America's General Electric.
GE's latest proposal, which followed two rejected offers, caused shares in Newcastle-based Wellstream to rise 43p to 790p, up 6 per cent.
Elsewhere in the energy services industry, Aberdeen-based Wood Group announced an agreement to buy fellow Granite City firm PSN for $955m (607m) and added that the deal will be significantly earnings enhancing. Shares in Wood were near to the top of the FTSE 250 Index, up 7 per cent, or 32.8p, to 521p.
Plant-hire company Ashtead followed them on the second-tier risers board after a broker upgrade in the wake of last week's forecast-beating half-year profits. Its shares rose 4.6p to 159.9p, having soared last week on its results cheer.
But pub group JD Wetherspoon was seeing falls after a broker downgrade, which comes in the wake of a recent shares rally.
Wetherspoon shares dropped 20p, or 4 per cent, to 435p followed by more declines for Comet parent Kesa Electricals after last week's disappointing update for the UK business.Kesa shares sunk 1.7p to 166.7p.
Other fallers in the FTSE 250 included housebuilders after Redrow dropped 7.4p to 128.1p and Barratt Developments declined 2.2p to 87.4p.