The FTSE 100 index has passed back over the 6,000 barrier with a rise of 41.8 points, or 0.7%, to 6,008.3, buoyed by takeover talk and interest rate expectations.
Steelmaker Corus has posted the biggest gains so far with a rise of 10.61% to 450.75p, after reports India's top private steelmaker, Tata Steel is in talks to buy the Anglo-Dutch steel firm.
Miners are also doing well with BHP Billiton up 4.02% to 905p, closely followed by Anglo American which has gained 3.25% to £22.56, while Rio Tinto has climbed 3.25% to £24.79, and Antofagasta has added 2.44% to 462p, as base and precious metal prices rose in line with oil.
However, Swiss mining firm Xstrata is the biggest drag on the index so far with a drop of 7.57% to £20.15, closely followed by Alliance Boots which is down 0.94% to 787p, while Kelda group has slipped 0.85% to 879.5p, and Vodafone has fallen 0.79% to 126.25p.
In Japan, the Nikkei 225 Stock Average rose 366.78, or 2.3%, to 16,449.33 at the 3pm close, on speculation the Federal Reserve may cut interest rates next year after the biggest part of the US economy slowed, boosting consumer demand for exporters such as Toyota.
Motor company Toyota climbed 290 yen, or 2.9%, to 6,760, while Shin-Etsu Chemical, the world's largest maker of silicon wafers, advanced 220 yen, or 2.9%, to 7,820, and Canon, the world's biggest digital camera maker, jumped 300 yen, or 4.8%, to 6,550.
Nissan Motor, Japan's second-biggest carmaker, also rose 46 yen, or 3.5%, to 1,369, despite Nissan and Renault SA ending talks with US firm General Motors on forming an alliance.
Elsewhere, Inpex Holdings, Japan's largest oil explorer, slipped 1,000 yen, or 0.1%, to 872,000, after reports Iran has rejected Inpex's request for an extension to a deadline to develop Iran's Azadegan oil field, the Islamic Republic's biggest oil discovery in 30 years.
In the US, the Dow Jones Industrial Average rose 123.27 points, or 1.05%, to end at 11,850.61, for a second consecutive record close, on optimism the Federal Reserve won't raise interest rates in the near future.
Boeing was among the biggest gainers with a rise of 2.7%, or $2.18, to $83.96, while shares of IBM rose 1.8%, or $1.45, to $83.10, while Altria the parent organisation of the company which makes Oreo cookies advanced 1.7%, or $1.26, to $76.90.
Proctor & Gamble also performed well with a rise of 1.67%, or $1.04, to $63.34, while Exxon Mobil climbed 1.8%, or $1.20, to $66.61, after oil prices gained $0.73 to settle at $59.41 per barrel.
Meanwhile, Intel rose 1.2%, or $0.25, to $20.82, while shares of Microsoft rose 2.1%, or $0.57, to $27.94, Ford Motor rose 4%, or $0.33, to $8.56, although General Motors declined 0.2%, or $0.05, to $33.36, after ending alliance talks with Nissan and Renault.IFAonline
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