THE FTSE 100 closed at a fresh record high on the first official trading day of 2017 as the year-end market rally continued into January.
The UK's blue chip index soared past last Friday's all-time closing high of 7,142.83, rising nearly 0.5 per cent to finish the trading day at 7,177.89.
It was slightly below the mid-session record set earlier in the day when the index reached 7,205.45.
Investors were seemingly optimistic following last week's so-called 'Santa rally' - a market phenomenon where stock prices traditionally rise during the final trading days of the year.
Connor Campbell, a financial analyst at Spreadex, said: "For now, at least, investors are ignoring the potentially disruptive events littered across 2017 - most pertinent to the FTSE being March's triggering of Article 50 and the impending announcements related to the banking sector's decision whether or not to stay in the UK post-Brexit - to get behind the UK index."
In currency markets, sterling fell 0.1 per cent against the US dollar to 1.225 after a private survey showed that American factory activity accelerated in December, overshadowing strong manufacturing data in Britain.
Figures released on Tuesday morning showed that the UK Markit/CIPS manufacturing purchasing managers' index (PMI) rose to 56.1 in December, up from 53.6 in November and above economists' expectations of 53.3. A reading above 50 indicates growth.
Against the euro, the pound rose 0.4 per cent to 1.176.
Across Europe, the French Cac 40 rose 0.35 per cent while the German Dax fell 0.1 per cent.
Brent crude lost its footing after rising to an 18-month high at around $58.08 per barrel on hopes that a deal between Opec and other major producers to curb output would tackle a supply glut and buoy prices.
That deal officially came into effect on Sunday January 1.
But Brent prices dropped one per cent to $56.11 per barrel later on Tuesday as the stronger US currency made the dollar-denominated commodity more expensive for international investors.
In UK stocks, London Stock Exchange shares fell 14p to 2,900p after the group agreed to sell its French clearing business LCH to Euronext for €510 million (£434m).
The move is part of an attempt to see off anti-trust concerns raised by the European Commission over its £21 billion tie-up with Deutsche Borse.
UK banking shares jumped as global regulators delayed a key meeting that was expected to usher in new capitalisation rules for major lenders.
Barclays rose 8.45p to 231.9p, while Lloyds Banking Group jumped 2.11p to 64.62p, and HSBC rose 8.9p to 665.8p.
Britvic jumped 7.5p to 574.5p following news that the soft drinks giant will acquire Brazilian juice firm Bela Ischia for 218 million Brazilian reals (£54.5m) as part of international expansion plans.
It marks the latest deal for the Robinsons squash maker in the country - which it describes as the "world's largest concentrates market" - having snapped up another juice firm, Ebba, in 2015.
The biggest risers on the FTSE 100 were Hargreaves Lansdown up 61p at 1,274p, Barclays up 8.45p at 231.9p, Fresnillo up 45p at 1,266p, and Lloyds Banking Group up 2.11p at 64.62p.
The biggest fallers on the FTSE 100 were Next down 213p to 4,770p, Dixons Carphone down 13.6p at 341p, Intu Properties down 7.3p at 274p, and CRH down 69p at 2,761p.
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