Housing stocks helped drive the London markets into positive territory as traders optimistically welcomed speculation over a stamp duty holiday.
The FTSE 100 closed 128.64 points higher at 6,285.94p at the end of trading on Monday.
Investors in the sector were also buoyed by new data which revealed that construction industry activity rebounded to growth in June following the phased reopening of building work.
The latest closely followed IHS Markit/CIPS construction purchasing managers' index (PMI) showed a reading of 55.3 last month, from 28.9 in May.
Figures over 50 represent growth.
The survey, which smashed analyst forecasts, came as shares in house-building firms were also higher after reports that the Government could introduce a six-month stamp duty holiday at the autumn budget.
Persimmon, Taylor Wimpey and Berkeley Group were among building firms in London's top index to soar higher as a result.
Across Europe, markets closed in the green on the back of positive data in China over the weekend, which suggested the country could see a v-shaped recovery from the virus.
Connor Campbell, financial analyst at Spreadex, said: "If not quite as lively as at the start of the day, the Western indices nevertheless remained in an optimistic mood on Monday, setting aside some truly terrifying Covid-19 stats in favour of an inchoate shift in sentiment.
"In Europe there was a marked deceleration as the session went on, even if the region's indices were still healthily in the green."
The German Dax increased by 1.73%, while the French Cac moved 1.62% higher.
Across the Atlantic, the Dow Jones surged on the bell amid trading optimism, although it fell slightly short of expectations amid concerns over how coronavirus has hit Texas and Florida badly.
Meanwhile, sterling was mixed but made gains against the dollar after a pleasing construction sector PMI signalled a robust turnaround in economic activity.
The value of the pound rose 0.14% versus the US dollar at 1.248 and was down 0.43% against the euro at 1.104.
In company news, Barratt Developments led the FTSE's risers after it said its finances are good enough to repay furlough money it claimed, as it also soaked up optimism over stamp duty reports.
Shares closed 39.1p higher at 529.4p.
Cineworld shares dipped by 2.56p to 57.6p after it said it is being sued by Canada's biggest cinema chain after pulling out of a £1.3 billion deal to buy the business.
The price of oil moved higher after Saudi Arabia hiked its prices higher for the third consecutive month.
The price of a barrel of Brent crude oil increased by 2.58% to 43.36 US dollars.
The biggest risers on the FTSE 100 were Barratt, up 39.1p at 529.4p, Rolls-Royce, up 17.7p at 280.9p, HSBC, up 25.15p at 408.65p, and Persimmon, up 139p at 2,398p.
The biggest fallers of the day were BT Group, down 1.85p at 109.5p, ITV, down 1.08p at 70.84p, Tesco, down 2.6p at 218.9p, and DS Smith, down 3.2p at 288.2p.
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