Hopes of a breakthrough in talks between Greece and its bail-out creditors cheered markets today as they rallied after a tough previous session.
Alexis Tsipras, prime minister of the debt-laden country, said it was close to reaching a deal, helping the FTSE 100 Index to recover all of its losses from Tuesday as it added 84.3 points to 7033.3.
Germany's Dax and France's Cac 40 also climbed sharply while in New York, the Dow Jones Industrial Average was ahead too.
In currency markets, sterling was pegged back against the greenback after encouraging signs on the US economy including better-than-expected home sales, durable goods, and consumer confidence.
The pound fell a cent to just over 1.53 US dollars while it also dropped a cent against the euro to a little under 1.41, with the single currency bolstered by hopes of a deal with Greece.
In equities, Imperial Tobacco and British Airways owner International Airlines Group (IAG) were among the winners as each received a boost from takeover developments.
Imperial rose three per cent, or 109p, to 3393p after US regulators gave approval for Reynolds American to buy smaller rival Lorillard.
The move paves the way for the merged group to sell Imperial around £4.5 billion worth of brands, including Winston and Maverick.
Meanwhile, the Irish government's decision to sell its 25 per cent stake in Aer Lingus to IAG helped lift shares in the BA parent. The stock rose three per cent or 17.5p to 562p, after the government and the Irish flag-carrier's board backed its protracted €1.36bn (£961 million) takeover offer.
Last year, Aer Lingus had rejected two takeover offers from IAG saying they undervalued the business.
However, budget rival Ryanair, which owns just under a 30 per cent stake in Aer Lingus, is yet to make a decision on what to do with its holding and could play "hard ball", according to analysts.
Ryanair has in recent years made repeated unsuccessful attempts to buy Aer Lingus.
Banking stocks shrugged off the publication of the latest consultation paper on stress test and ring fencing measures by the Bank of England's Prudential Regulation Authority to finish in positive territory.
Royal Bank of Scotland was up marginally by 1.9p to 347.1p while Lloyds edged higher by 0.59p to 87.41p. Barclays was up 1.6 per cent by 4.35p to 269.25p and HSBC by 8.3p, or 1.3 per cent, to 625.3p.
In the FTSE 250 Index, De La Rue - which prints notes for the Bank of England - sparked a share fall after it said its annual profits fell sharply as it continued to face challenging market conditions and price pressures.
The Basingstoke-based firm, which also makes passports and tax stamps, said underlying pre-tax profit fell by a quarter to £57.7 million after it also experienced lower levels of new business at its security products unit.
Shares slumped nine per cent, or 49.5p to 504p.
The biggest FTSE 100 Index risers were CRH up 63p to 1839p, Imperial Tobacco up 109p to 3393p, International Airlines Group up 17.5p to 562p and Ashtead up 33p to 1217p.
The biggest FTSE 100 Index fallers were Glencore down 3p to 286.8p, Old Mutual down 2p to 229p, Weir Group down 14p to 1988p and SABMiller down 18.5p to 3539p.
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