The FTSE 100 posted its biggest one day rise since early February, up three per cent by the close, tracking wider European markets higher.
The German Dax rose by 3.4 per cent and the French CAC 40 added 3.5 per cent. The Stoxx Europe 600 index climbed 3.7 per cent.
Sterling recorded its biggest one day leap in eight years against the dollar, up over two per cent, as it breached $1.47 for the first time since May.
The pound has recorded wild swings in recent days, touching a two-month low of $1.41 last week.
This morning investors will respond to another wave of polling data that arrived late last night.
Among people who say they will definitely vote, Remain now enjoys a seven-point lead according to an ORB poll for the Daily Telegraph.
In the previous poll, Leave had a one-point lead. A study by the National Centre for Social Research for the Financial Times gave Remain a 53-47 point lead. But a YouGov poll for the Times showed Remain trailing by two points.
“Overall, mixed polling results tonight – this is going to the wire,” said polling guru Mike Smithson.
Nonetheless, investors appear to be more confident of a Remain victory. Yesterday, major markets in the US also posted gains. The S&P 500 was 0.58 per cent higher at its close in New York, while the Dow Jones Industrial Average rose 0.73 per cent and the tech heavy Nasdaq climbed 0.77 per cent.
“The frenzy of buying that has been seen across global markets matches the panic selling we witnessed last week,” said IG’s Chris Beauchamp.
“Global markets have had a Bremain bounce,” added CMC Markets’ Jasper Lawler. “A new optimistic tone has taken hold at the beginning of the final week before the referendum.”
The market-moving polls were released as campaigning on both sides resumed after a three-day pause in the wake of the murder of MP Jo Cox, who was killed in her constituency last Thursday.
The volatility in the markets could continue all week. “Polls remain very even,” cautioned Societe Generale macro-strategist Kit Juckes, adding, “They think it’s all over – it isn’t, yet.”.
In an interview with LBC yesterday, chancellor George Osborne confirmed he was looking at contingency plans to cope with the volatility that would likely follow a vote to leave.
Both campaigns are expected to ramp up rhetoric ahead of Thursday’s crunch vote.