The FTSE broke through the 4,000 level today with a rally that lasted much of the day.
The index closed up 2.13 per cent to 4,052.98 returning to highs not seen since the start of the month.
Financial stocks led the gains amid hopes the worst of the financial losses could now be behind us as JP Morgan posted better than expected results in the US with a profit of $1.52 billion.
Prudential was up 8.61 per cent, Barclays rose 7.72 per cent and Lloyds Banking gained 6.66 per cent to 89.70p.
Distributor Buzl was down 9.99 per cent on lower sales figures, while Experian dropped 5.25 per cent.
Miner Lonmin fell 4.18 per cent.
David Jones, chief market strategist at IG Index, said: "It is the usual suspects playing their part in lifting the index today, with strong performances from the banking and mining sectors.
"Better-than-expected profits by JP Morgan kept sentiment positive in the afternoon, after banks were given a boost early on by comments from the Barclays president, which helped fuel investors hopes that all the bad news is out of the way for this sector."
However, Mr Jones was not quite ready to take off his bearish hat.
"Although the UK market touched its best levels for about ten days, there still seems to be something of a lack of conviction either way for traders at the moment when it comes to the medium-term direction for shares," he said.
"It may be just prolonged Easter holidays resulting in lower volumes but recently we have got used to the odd foray above 4000 on the FTSE running out of steam. In the shorter term it wouldnt be surprising to see the market carry on the recent pattern of up one day, down the next with little significant change in either direction."