The FTSE 100 closed up 165.71 points, or 1.6%, at 10,378.82 on Thursday, as easing oil prices and the Bank of England's decision to hold interest rates boosted investor sentiment. The FTSE 250 ended 1.2% higher, while the AIM All-Share rose 0.7%.
The Bank of England's Monetary Policy Committee voted eight to one to maintain bank rate at 3.75%, with chief economist Huw Pill dissenting in favour of a quarter-point rise. The Bank outlined three scenarios for the UK economy amid the Middle East crisis and energy price shock, noting that inflation is expected to be higher in the near term than previously forecast.
Brent crude for June delivery fell to $114.38 per barrel from $117.20 at Wednesday's close, after reports that US Central Command has prepared a plan for strikes on Iran. Analysts warned that this could signal an end to the current fragile ceasefire and prolonged supply disruptions.
In Europe, the European Central Bank also left rates unchanged, but President Christine Lagarde hinted that a June rate hike had come closer. The CAC 40 in Paris rose 0.5% and the DAX 40 in Frankfurt gained 1.4%.
US markets were higher, with the Dow Jones up 1.3% and the S&P 500 0.4% higher. Meta Platforms fell 9.0% after higher capex, while Alphabet soared 6.7% on strong cloud results. The pound strengthened to $1.3588 against the dollar.
In London, United Utilities led the FTSE 100 gainers, rising 11% after reporting sharply higher annual results, expanding its investment programme, and launching an £800 million equity raise.
