The FTSE 100 soared to above 6,900 for the first time this year on Thursday.
At 6,914.71, the bluechip index closed up 0.7 per cent, its highest level in more than 14 months.
The market had been lingering at less than 6,850 earlier in the afternoon, but rallied late on as oil prices rose around four per cent. The FTSE 250 was also up on Thursday, climbing 0.61 per cent to 17,807.56, its highest level for more than a year.
Market analysts noted that, while the FTSE 100 was up, it underperformed other markets.
Jasper Lawler, of CMC Markets, said: “The FTSE 100 manage to erase early losses but underperformed equity benchmarks in Germany and France as post-Brexit concerns highlighted risks for the domestic economy.
“A weak property market and a widening pensions funding gap have hit homebuilder and financial shares.”
Elsewhere, the pound continued to drop against the euro, falling to 1.163. Earlier, the pound had dropped to 1.159 – its lowest level since 2013 – after a Royal Institution of Chartered Surveyors report revealed faltering house price growth in July.