The prospect of a further delay to Brexit eased some fears of a disruptive no-deal departure and sparked a rally in homebuilders and banks on Wednesday, helping London's main index hold on to a six-month high, while midcaps outperformed.
The FTSE 250 bounced 1.2 percent - its biggest rise in two-and-a-half months - for a fifth straight session of gains, while the FTSE 100 added 0.4 percent and ended the session at its highest level since early October.
But the exporter-heavy FTSE 100 lagged its European peers as the pound firmed.
Prime Minister Theresa May said on Tuesday said she would seek another Brexit delay beyond April 12, hoping to try to agree a European Union divorce deal with the opposition Labour leader.
Dublin's main index, seen as a gauge of Brexit jitters, jumped 1.8 percent to its highest in half a year.
"None of this guarantees Britain won't bumble out of the EU sans deal, especially given the frothing fury May's cross-party olive branch has caused among the hard right of her Tory party," said Spreadex Analyst Connor Campbell. "However, it is better than nothing."
Although the default remained that Britain would leave the bloc without a deal, May's move offered the prospect of keeping the UK in a much closer economic relationship with the EU after Brexit than she had envisaged.
That boosted shares in housebuilders with blue-chips Persimmon, Taylor Wimpey and Barratt all rising between 2.4 and 4.4 percent.
Taylor Wimpey, Britain's third-largest homebuilder, surged to its highest in 10 months.
Britain's "big banks" including Royal Bank of Scotland, Lloyds and Barclays, also thrived.
However, exporters felt the brunt of a stronger pound.
Burberry slipped 2 percent as JP Morgan analysts slashed annual core profit estimates for the luxury goods brand on Brexit-related sterling volatility.
But mid-cap transport company Stagecoach advanced 3.5 percent after hiking its annual adjusted profit target on what it called "strong trading and positive progress" in the UK rail business.
The FTSE 250 index saw gains across the board, with all sectors finishing the day in positive territory, while the small-cap index saw some steep news-driven moves.
Superdry slumped another 8 percent as the return of co-founder and former boss Julian Dunkerton as interim CEO prompted the majority of board members to step down on Tuesday.
CMC Markets touched its lowest price on record as it forecast a plunge in net operating income for fiscal 2019 as new rules curbed client trading activity, and announced the departure of its CFO. But shares shed some losses to end 1.2 percent lower. Financial advisory firm Lighthouse surged 24.5 percent to 32.4 pence on its best day in nearly seven years after a 33 pence a share buyout offer from Quilter's unit Intrinsic Financial.
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