Oil majors led the charge as the London market burst back through the 6,900 mark following investor cheer over an output-limiting deal struck by the Opec oil cartel.
The FTSE 100 Index was up 70.04 to 6,919.42 after Opec reached its first agreement in eight years to reduce oil output to a range of 32.5 to 33 million barrels per day – a drop of around 700,000 barrels.
Royal Dutch Shell B leapt more than 6% or 126.5p to 2,022p, while rival BP rose around 4% or 18.8p to 451p.
The global glut of crude has depressed oil prices for more than two years and weakened the economies of oil-producing nations.
The deal was reached after several hours of talks in the Algerian capital, Algiers, though output levels must still be finalised at an Opec meeting in Vienna in November.
Brent crude prices were edging closer to the 50 dollar a barrel mark following the announcement, up 1.2% to 49.27 US dollars a barrel.
Jasper Lawler, market analyst at CMC Markets, said: “The proposed deal should keep a floor under oil prices until Opec’s official meeting in November, when the details will be ironed out.”
However, Connor Campbell, financial analyst at Spreadex, said it was a surprise Saudi Arabia was willing to back an output cut.
“Traditionally Opec’s de facto leader, closely followed by Iran, has been the biggest obstacle to any deal,” he said.
In Europe, Germany’s Dax fell 0.3% and the Cac 40 in France rose 0.2%
On the currency markets, the pound was down 0.2% against the US dollar at 1.299 US dollars as it continued to be depressed by comments from Minouche Shafik, a key member of the Bank of England’s Monetary Policy Committee, who said on Wednesday that further stimulus is likely to be needed as the UK stomachs a “sizeable economic shock” from the Brexit vote.
Sterling was also 0.4% lower against the euro at 1.155 euro.
In UK stocks, positive sentiment in the wake of the Opec deal gave a lift to London-listed mining giants, with Glencore rising 6.5p to 215.9p and Anglo American up 56.4p to 980.1p.
However, overall gains on the London market were pegged back after a profit warning from outsourcing giant Capita caused its shares to plunge.
Capita was off more than 26% or 254.5p to 698p after it said pre-tax profits would come in at between £535 million and £555 million for the full year, compared with previous forecasts of £614 million.
Shares in Alton Towers owner Merlin Entertainments were also down 27.5p to 442.1p after it said it had “learned every lesson” from last year’s Smiler rollercoaster crash as it revealed that visitor numbers were still being affected.
Merlin was fined £5 million earlier this week after admitting health and safety breaches.
The biggest risers on the FTSE 100 Index were Royal Dutch Shell B up 126.5p to 2,022p, Royal Dutch Shell A up 119p to 1,924.5p, BHP Billiton up 71p to 1,168p, Anglo American up 56.4p to 980.1p.
The biggest fallers on the FTSE 100 Index were Capita down 254.5p to 698p, Merlin Entertainments down 27.5p to 442.1p, Barratt Developments down 20.7p to 472.9p, Babcock International down 41p to 1,046p.