London's leading shares index made solid gains yesterday as euphoria from a positive US jobs report and optimism around the future of the euro boosted investor confidence.

The FTSE-100 index was 21.5 points higher at 5808.8 as European Central Bank chief Mario Draghi's pledge last week to devise a plan to help the eurozone eased the borrowing costs of beleaguered countries.

Spain's implied borrowing costs fell away from the 7% danger mark as traders digested his statement and reacted to reports that the debt-ridden nation would consider asking for a full-blown bailout.

Meanwhile, figures last week revealing that 163,000 US jobs were created in July, significantly higher than expected, continued to lift sentiment.

The pound fell against the euro to 1.25 as the single currency strengthened amid hopes Mr Draghi would fulfil his promise. Sterling dropped against the US dollar to 1.56.

Banks and miners were among the main beneficiaries from the improving sentiment. Evraz topped the risers' board, up 11.4p, or 5%, at 251p, while Barclays was 5.9p higher at 983p. Taxpayer-backed Royal Bank of Scotland rose 12.8p to 228.8p, as it built on Friday's 6% gains.

Shares in high street giant Marks & Spencer enjoyed strong gains following reports it could become a £6 billion bid target.

Bankers at institutions including Bank of America Merrill Lynch have been considering providing debt finance for a bid should one materialise, it was reported. Shares in the retailer gained 6.6p at 347.7p.

In a quiet session for corporate news, shares in utility firms were lower after former Ofwat chief Sir Ian Byatt called for a price cap to keep hikes in water bills at inflation or below.

He said water regulation needs to move away from its focus on improving quality and concentrate instead on price. Severn Trent fell 20p to 1718p and South West Water firm Pennon was 11p lower at 757p.

HMV shares were 4% lower as the music retailer confirmed the departure of finance director David Wolffe – less than a week after chief executive Simon Fox announced his departure.

With the group expected to report full-year losses of £16 million later this week, the stock slipped 0.1p to 3.5p.

Construction firm Morgan Sindall was 3.5p lower at 681.5p, despite reporting a 4% rise in underlying profits as it weathers tough economic conditions.

The group, whose high- profile projects have included fitting out the BBC's MediaCity offices at Salford, said half-year revenues slipped 8% to £1 billion.