LONDON'S top flight index hit a 14-month high and finished just shy of the 7,000 mark, as investors began pricing in the prospect of fresh monetary stimulus from the Bank of England.
The FTSE 100 Index has continued its winning streak for the eighth consecutive session, touching 6,955.34, before paring gains to finish 25.17 points ahead at 6,941.19 - its highest close since June 3 2015.
The rally comes as a string of economic reports this week are expected to give further insight into how the Brexit vote has hit UK economic growth.
Some investors believe the reports could spur the Bank into offering more support to the UK economy after cutting interest rates to 0.25 per cent at the beginning of the month.
But the prospect of the Bank slashing the cost of borrowing or firing up the printing presses for more quantitative easing has sent the pound plunging to its lowest level against the euro for three years.
Sterling was down 1.1492 against the euro, before edging up to a 0.6 per cent fall to 1.1493 euro, while the pound was down 0.3 per cent against the dollar at 1.2875 US dollars.
Neil Wilson, markets analysts at ETX capital, said: "A report from Rightmove showing house prices fell by 1.2 per cent in July has added to concerns about the property market amid signs of a significant slowdown.
"It's just the latest in a string of reports but each new piece of weak data fuels speculation the Bank of England will roll out additional sterling-negative stimulus.
"This week's data will be vital as it's the first glimpse of official figures for retail sales, inflation and employment for July."
Across Europe, Germany's Dax was up 0.2 per cent and the Cac 40 in France closed marginally higher.
The price of oil surged 2.5 per cent or one dollar and 17 cents to 48.14 US dollars a barrel amid mounting speculation that producers may look at ways to boost prices as the market remains oversupplied.
In UK stocks, accountancy software giant Sage Group came under pressure after it was hit by an internal data breach.
The firm, which provides accounting, payroll and payments software to businesses, launched an investigation after discovering that an internal login had been used to gain "unauthorised access to customer information".
It is understood that the breach may have affected between 200 and 300 customers.
Shares dropped more than four per cent in early trading, before closing up 0.5p to 740.5p.
Away from the top tier, housebuilder Bovis Homes was nearly three per cent lower, despite booking a double digit rise in profits.
The FTSE 250 firm said the "underlying market fundamentals" for the UK housing market remained positive in the wake of the EU referendum result, as half year pre-tax profits stepped up 15 per cent to £61.7 million to June 30, up from £53.8 million in 2015.
Revenues also climbed 18% to £412.8 million over the period, building on £350.7 million in the first half of 2015.
However, shares were down 23p to 813p, after its sales rate slipped to 0.5 since the end of June, down from 0.58 in 2015.
Shares in retail giant Sports Direct took a hammering after the firm agreed to pay thousands of staff £1 million in back pay.
In a deal struck with HMRC and Unite the union, the retailer will provide payments dating back to May 2012, with some staff pocketing up to £1,000.
The under-fire firm, which has been lambasted by MPs for its "Victorian" working practices, will deliver the payouts to agency staff and workers directly employed by Sports Direct at its Shirebrook warehouse in Derbyshire.
Shares were off nearly four per cent or 11.5p to 297.3p.
The biggest risers on the FTSE 100 Index were Paddy Power Betfair up 220p to 9,800p, Hikma Pharmaceuticals up 49p to 2,324p, Mediclinic up 21p to 1,119p, Anglo American up 15.8p to 872.7p.
The biggest fallers were Berkeley Group down 46p to 2,493p, Tesco down 2.7p to 157.8p, Royal Bank of Scotland down 3.2p to 193.1p, Lloyds Banking Group down 0.9p to 54.5p.
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