FEVERED speculation throughout the day that Prime Minister Boris Johnson could call a snap general election helped the pound continue its freefall against the US dollar.
In response, the FTSE 100 rose by a similar margin, with foreign investors enjoying the weak pound and international London-listed businesses seen as a safe haven from the ongoing political and economic uncertainties in the UK.
The FTSE 100 closed up 74.76 points, or 1.04% at 7,281.94. The pound was down 0.82% against the US dollar, with a single pound worth 1.2064.
Against the euro, the pound fell 0.61% to 1.0998 euros.
David Madden, market analyst at CMC Markets UK, explained: "The FTSE 100 is soaring thanks to the drop in sterling. The international nature of top tier British equity market means a slide in the pound helps the constituents of the index.
"The FTSE 250 is a better reflection of the UK economy, and the market is up 0.4%, which is impressive when you consider the prospect of voters going to the polls."
In company news, Marks & Spencer propped up the bottom of the leading index, closing down 2.65p at 189.6p, with investors fearful that the high street stalwart is about to be dumped out of the FTSE 100 for the first time in its history.
Analysts explained this may be due to investment products that track the FTSE 100 needing to sell up their shares in M&S, as it will no longer be followed.
At the top end, drug firm AstraZeneca was one of the strong risers, closing the day up 215p at 7,533p, after getting positive news on its diabetes and heart disease drug Brilinta. A positive upgrade from Deutsche Bank helped.
There was boardroom musical chairs for tech business Micro Focus and banknote to passport maker De La Rue.
Kevin Loosemore was unveiled as the new chairman of De La Rue, replacing Philip Rogerson, who quit following attacks from activist investor Crystal Amber, which said he had "overseen the destruction" of shareholder value in a July statement.
Shares in De La Rue stayed flat at 214p and Micro Focus - which issued an unannounced profit warning last week - closed up 21.2p at 1087.6p.
Some investors voiced disappointment at the appointment, especially at a time when Micro Focus is in the middle of an overhaul and strategic review.
Elsewhere, shareholders in pottery maker Portmeirion Group had to contend with the departure of its chief executive of nearly 25 years, Lawrence Bryan, who stepped down.
The long-serving boss will stay on the board in a non-executive capacity, while group finance director Mike Raybould will take over as chief executive. Shares closed down 15p at 860p.
The biggest risers on the FTSE 100 were Experian up 76p at 2,594p; AstraZeneca up 215p at 7,533p; Intertek up 156p at 5,584p; Ocado up 33p at 1,328.5p and Diageo up 87.5p at 3,591p.
The biggest fallers were Micro Focus down 21.2p at 1,087.6p; Marks & Spencer down 2.65p at 189.6p; Just Eat down 10p at 775.8p; Antofagasta down 10.2p at 855.8p and Smurfit Kappa down 14p at 2,522p.
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