The London markets surged higher as a string of positive economic figures helped traders to overcome fears over a possible second wave of coronavirus.
Better-than expected manufacturing PMIs across the globe drove sentiment higher after a subdued start to the trading session.
The FTSE 100 closed 135.09 points higher at 6,032.85p at the end of trading on Monday.
Connor Campbell, financial analyst at Spreadex, said: "After a rocky start, the Western markets blossomed as August's trading got under way - even if there was plenty out there to undermine Monday's aggressive gains.
"Despite the ongoing threat of a second wave of coronavirus cases in mainland Europe, and the UK government's various lockdown U-turns in the past few days, the region's indices were positively giddy this Monday.
"That's in part due to a string of better than forecast manufacturing PMIs for July, with Spain and the US ISM figure the standouts."
In the UK, the closely watched IHS Markit/CIPS manufacturing purchasing managers' index (PMI) hit a score of 53.3 last month, slightly surpassing analyst expectations.
Stocks closed higher in Europe, as traders chose to cast aside concerns that US politicians still have not reached a compromise regarding the one trillion dollar stimulus package.
The German Dax increased by 2.71%, while the French Cac moved 1.93% higher.
Across the Atlantic, the Dow Jones followed Europe's lead to nudge higher, albeit slightly less enthusiastically, amid strong demand for tech stocks.
Meanwhile, sterling's strong recent streak was ended by a rebound in the value of the dollar, after the US greenback had hit a two-year low on Friday.
The pound fell 0.2% versus the US dollar at 1.306 and was up 0.03% against the euro at 1.111.
In company news, HSBC was the biggest faller on the FTSE 100 after it suffered a 65% drop in pre-tax profit in the first half of the year following a dive in interest rates and coronavirus disruption.
The bank reported profits of $4.3 billion (£3.2bn) in the half year to June 30, down from $12.4bn (£9.5bn) in the same period in 2019.
Shares slid by 9.95p to 332.25p at the close of play.
Insurer Hiscox saw shares fall after it warned investors it increased its predicted costs from Covid-19 by more than 50%.
Shares fell by 26.4p to 755.2p after it said it expects $232 (£178m) will be needed to deal with virus-related claims.
Elsewhere, Metro Bank agreed to buy lender RateSetter in a deal worth up to £12 million, boosting its shares.
The high street challenger bank saw shares rise by 6.7p to 110p after it announced the deal to buy one of the country's largest and oldest peer-to-peer lenders.
The price of oil pushed higher on Monday as it was buoyed by broad positive sentiment, with global manufacturing sectors returning to growth.
The price of a barrel of Brent crude oil increased by 1.17% to 44.13 US dollars.
The biggest risers on the FTSE 100 were Lloyds, up 1.58p at 27.87p, Smurfit Kappa, up 136p at 2,676p, Natwest, up, 5.05p at 111.05p, and Intertek, up 244p at 5,622p.
The biggest fallers of the day were HSBC, down 9.95p to 332.25p, BT Group, down 0.56p at 98.02p, IAG, down 0.9p ay 163.85p, and Rolls-Royce, down 1.2p at 230.4p.
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