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The FTSE 100 (^FTSE) climbed to a fresh month-high as global financial markets rallied on the back of plans for the US and China to slash tariff rates for 90 days, following weeks of intensifying trade tensions.
UK multinationals were broadly buoyed by the announcement, with mining and commodity firms particularly positive as a result.
However, pharmaceutical companies, such as AstraZeneca (AZN.L) and GSK (GSK.L), lost ground after President Donald Trump pledged to bring down the price of drugs in the US.
London’s top index finished up by 0.59%, or 50.18 points, to close at 8,604.98.
Stocks across continental Europe also continued to wipe out their losses from President Trump’s Liberation Day by making gains during the session.
The Cac 40 (^FCHI) ended 1.37% higher for the day and the Dax (^GDAXI) index was up 0.22%.
In the US, the Dow Jones (^DJI) climbed by more than 2% in early trading, with the tech-focused Nasdaq (^IXIC) jumping even more sharply amid hopes the tariff pause will improve global trade relations, at least in the short term.
Chris Beauchamp, chief market analyst at IG, said: “The weekend meeting between the US and China has yielded yet another 90 day pause, lighting a new fire under the market rally.
“The rebound from the April low was beginning to look a little tired, but today’s news has given it new life.
“The longer Wall Street continues to rebound, the harder it will be for investors to avoid putting money back to work in the US, even though worries remain that the data will start to deteriorate in the months to come.”
Meanwhile in currency, the pound lost further ground against the resurgent dollar but rose to its highest level against the Euro for more than a month.
The pound was 0.81% lower at 1.319 US dollars and was up 0.46% at 1.187 euro when London’s markets closed.
In company news, pork giant Cranswick (CWK.L) tumbled in value after UK supermarkets suspended supplies from one of its farms that has been linked to alleged abuse against pigs.
Covert footage emerged over the weekend that appeared to show workers at Northmoor Farm in Lincolnshire abusing piglets.
Shares in the meat supplier fell 7.1% to 4,980p on Monday as a result.
Elsewhere, online trading business IG (IGG.L) was in the green after reporting that it benefited from a recent boom in trading activity amid volatility in global financial markets.
It told shareholders that revenues and profits are now forecast to meet – or slightly exceed – the upper end of expectations for the year to May 31.
Shares in the firm were choppy during the session but ultimately finished up 1.8% at 1,109p.