The FTSE 100 ended up 35.46 points at 5,780.35, having earlier hit a fresh 21-month intra-day peak of 5,790.40. The index climbed 1.2 per cent on Thursday and was closed on Friday and Monday for the Easter holiday.
Energy stocks and miners were big gainers following robust US jobs, service sector and housing data which lifted the demand outlook for crude and base metals.
Crude oil surged to its highest level since October 2008 on Monday, with oil giants BG Group, BP and Royal Dutch Shell adding 1.1 to 2.4 per cent.
Miners also rose as copper hit a 20-month high above $8,000 a tonne. Xstrata, Kazakhmys and Vedanta Resources were among the best off, adding 1.6 to 3 per cent.
“The UK market is making up for lost time over the Easter weekend and when the US market leads, the UK plays catch up,” said Angus Campbell, head of sales at Capital Spreads.
British insurer Admiral Group rose 2.6 per cent, touching a lifetime high, with sentiment bolstered by recent management visits that have added to a conviction it is well-placed to take market share from its rivals, traders said.
The UK blue chip index gained almost five per cent in the first quarter of 2010, after rising 22 per cent in 2009.
The next resistance level for the FTSE 100 is 5,973, according to Stephen Pope, chief global equity strategist at Cantor Fitzgerald.
The market shrugged off the confirmation of a UK general election on May 6 as well as the lingering debt problems in Greece, whose share benchmark fell 2.2 per cent.
Royal Bank of Scotland (RBS) rose 0.6 per cent, with reports saying US billionaire and Wall Street turnaround expert Wilbur Ross is backing Virgin Money’s bid to buy RBS’s branch network.
Barclays and Lloyds Banking Group were both 0.5 per cent higher, while HSBC fell 0.4 per cent.
Mobile telecoms heavyweight Vodafone shed 1.4 per cent after Verizon dismissed speculation the company would merge with wireless venture partner Vodafone Group, saying such a deal would offer little benefit.
With investors’ moods buoyed by signs of US economic recovery, defensive stocks, which tend to underperform when the market rallies, peppered the FTSE 100 fallers list.
Imperial Tobacco, drugmaker AstraZeneca and consumer goods giant Unilever fell 0.9 to 1.3 per cent.
BAE Systems lost 1.3 per cent with traders pointing to a Goldman Sachs note sent on Monday, which rated the defence company as a “conviction sell”, though they noted it was just a reiteration of the broker’s existing stance.
British Airways shed 2.3 per cent ahead its latest traffic figures, which should show the impact of the strike.