The index had gained over 91 points (a rise of 1.35 per cent) at the time of writing to reach 6,871.29.
Banks stocks shared in a broad rally across Europe as hopes rose of a state bailout for Italian bank Monte dei Paschi di Siena (MPS). The share price of the beleaguered lender has had a volatile few days as the Italian referendum result put a private-sector bailout in jeopardy.
If the state steps in successfully it could reduce investor perceptions of a risk of contagion spreading through Europe’s banking sector.
HSBC shrugged off a €33.8m fine from the European Commission for participating in a cartel manipulating the rate at which European banks lend to each other, known as Euribor. The fine ends the investigation which concerned multiple banks around the world.
Meanwhile mining stocks have risen after analysts confirmed a buy recommendation for Rio Tinto. It was joined in the rises by other miners who operate abroad but report earnings in the UK, such as Antofagasta and Anglo American.
The move comes at the same time as poor manufacturing data indicates problems ahead for the UK economy.
David Cheetham, market analyst at XTB, said the move higher is “a good example of how the benchmark is a poor reflection of the nation’s real economy and instead is more driven by movements in the pound and external forces – such as the strong rally in European equities seen since Monday’s weak open”.
The fall in the value of the pound benefits British multinationals by making earnings in foreign markets more valuable.
“The FTSE 100 has made a bullish breakout at 6850, opening the door for a return to 7000 Nov highs,” said Mike van Dulken, head of research at Accendo Markets.