The FTSE 100 has broken through the 6,000 level for the first time in five years.
At 9 am the benchmark was up 41.3 points or 0.7% at 6,034.3, after reaching 6,044 early on.
The index was last at this level in March 2001. The all-time high for the index, of 6,930.2, came on 30 December 1999.
Insurers were among the day's main gainers, with Prudential and Legal & General topping the list.
The market's mood was further boosted by Vodafone after it confirmed it had sold its Japanese arm to Softbank for a higher-than-expected £8.9bn.
Vodafone shares rose 2%, or 3.25p, to 133.25p after it said it would return £6bn to shareholders.
Meanwhile, the wider market was boosted by news that Body Shop has agreed to been taken over by French company L'Oreal.
Shares rose 10% or 27.5p to 295.5p, bringing a £130m windfall for founder Dame Anita Roddick and her husband Gordon.
In Japan stocks gained, with the Nikkei 225 Stock Average jumping 243.52 points, or 1.5 %, to 16,339.73 at its close as short while ago.
The gains for the day reversed losses for the week. Brokerages led the advance after Marusan Securities tripled its annual dividend and investors bet faster economic growth will bolster earnings in the industry.
Marusan yesterday said it plans to pay a full-year dividend of 110 yen, three times more than a year ago. The stock soared for a second day today, surging 282 yen, or 17%, to 1,905. It was the best performing stock on the first section of the Tokyo Stock Exchange.
Nomura, Japan's largest brokerage, gained 85 yen, or 3.5%, to 2,505. Daiwa Securities Group, the second biggest, advanced 53 yen, or 3.7%, to 1,498.
Exporters such as Canon and Matsushita Electric Industrial gained after a US report showed slower-than-expected inflation, easing investors' concern that interest rates will keep rising in the world's biggest economy. The Federal Reserve has raised its benchmark rate 3.5 percentage points to 4.5% in the last 20 months.
Canon, the world's biggest digital camera maker, gained 90 yen, or 1.2% to 7,490. Matsushita, the world's biggest consumer electronics maker, advanced 30 yen, or 1.2%, to 2,570. Nissan, Japan's second-biggest car manufacturer, added 4 yen, or 0.3%, to 1,356.
In the US, stock closed mixed yesterday, despite a report showing that inflation was well in hand last month. The Dow Jones industrial average finished with a gain of 43 points at 11253. Advancing issues on the New York Stock Exchange led losers almost two-to-one on volume of 1.6bn shares.
The Labor Department reported before the start of trading that consumer prices inched up just one-tenth percent in February, easing investors’ worries about higher prices and rising interest rates.
The one soft spot for stocks was oil, which gained almost a dollar and a-half on what analysts say was technical trading.IFAonline
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