Britain's top share index joined a European rally on Monday as worries about Brexit eased after the weekend vote in Brussels and investors piled back into oil and financials and the battered telecoms sector rallied on dealmaking news.
The exporter-heavy FTSE 100 rose 1.2 percent, while the more domestically focused FTSE 250 index added 1 percent.
"Theresa May's Brussels success comes laden with some potentially deal-sinking domestic caveats, namely the House of Commons' 'meaningful vote' expected to be held on 12th December," said Forex.com analyst Connor Campbell.
Financials gave the biggest boost to the FTSE with HSBC, Standard Chartered and Standard Life Aberdeen rising between 2.6 and 3 percent after EU leaders finally sealed a Brexit deal, saying the package agreed with Prime Minister Theresa May was the best Britain will get.
Their gains also reflected strength in the broader European banking sector which rallied to reports that Italy could lower its budget deficit target to avoid a disciplinary procedure from Brussels.
Oil stocks were also in demand as crude prices clawed back some losses from a nearly 8 percent plunge the previous session amid easing worries about a glut.
Shares in Royal Dutch Shell and BP were up 2.9 percent and 2.4 percent respectively, while energy services firm John Wood Group gained 7.6 percent to lead gainers on the FTSE after HSBC upgraded the firm to buy.
"Eager buyers would do well to tread carefully, since it looks like the occupant of the White House is still very keen on talking down the oil price," said IG chief market analyst, Chris Beauchamp.
Faroe Petroleum surged 27 percent after Norway's DNO
launched a hostile bid to buy the independent oil and gas company for around 608 million pounds.
Faroe Petroleum rose to 159.6 pence per share, topping the 152 pence offered by DNO.
Dealmaking also boosted Vodafone Group in afternoon trading after a Reuters report that the European Commission was set to clear a merger in the Netherlands revived optimsim about possible M&A activity in the hard-hit sector.
The European telecoms index shot up 3.3 percent on the news.
Among the few losers on the FTSE was Melrose, down 2 percent after Sky News reported that the industrial company had got lower-than-expected bids for its Powder Metallurgy unit.
In the small-cap index, Vectura Group slumped 10.2 percent on news the company has dropped its asthma treatment after a trial failure.
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