The FTSE 100 closed 0.63 per cent up at 6,796.45 points on the first day of trading following Greece's securing of a much-needed bailout loan.
European shares climbed to a six-week high, with the pan-European FTSEurofirst 300 index up 1.36 per cent to 1,608.12. In the US, the Dow Jones was also up 0.16 per cent in mid-morning trading, while the S&P 500 rose 0.59 per cent.
Investors' nerves about the possibility of a Greek exit from the eurozone appeared to be quelled after Eurogroup finance ministers confirmed it would begin negotiations to grant the financially crippled country a three-year bailout loan.
European Central Bank chief Mario Draghi also approved the amount of emergency liquidity assistance made available to Greek banks by €900m after Greece's parliament agreed to vote in favour of austerity measures outlined by its creditors. According to Reuters, Greek banks are set to re-open on Monday.
However, the euro was down 0.53 per cent against the dollar at around $1.09, potentially triggered by some traders having waited for a more stable situation before selling unwanted euros.
Sterling rose to its strongest level in seven and a half years against the euro to €1.4315.