The FTSE 100 headed over the 5500 mark today before dipping to close at 5494.40.
At close of play the index was up 1.51 per cent.
FirstGroup took the greatest gains up 6.89 per cent followed by Ferrexpo rising 6.55 per cent.
Carphone Warehouse rose 5.59 per cent, Rolls Royce climbed 4.92 per cent and Invensys was up 4.79 per cent.
The greatest fall were recorded for Marks & Spencer down 4.52 per cent after last week's poor sales figures.
Royal Bank of Scotland dropped 3.08 per cent, Friends Provident fell 2.86 per cent and Whitbread was down 2.39 per cent.
ITV slid 2.35 per cent.
Outside the FTSE 100, Bradford & Bingley fell 16 per cent to 42p, builder Taylor Wimpey dropped 13.39 per cent and Comet-owner DSG International was down 9.74 per cent.
David Jones, chief market strategist at IG Index, said: "Todays rally has been something of a relief for traders after some of the relentless falls seen recently. There was little corporate or economic news for markets to latch onto either in London or New York with most of the big movers being driven by broker up and downgrades.
"Some retailers were under the cosh again with Marks and Spencer trickling another few per cent lower and setting fresh seven-year lows.
"But theres still arguably a feeling out there that after the major declines already experienced by house builders, and then banks, that there could still be more downside to play out for the retail sector as a whole."
He added: "As mentioned on more than one occasion over the past few weeks the 5300/5400 levels on the FTSE are still being seen as a significant line in the sand for the market - but it is going to take a few more days to see if this once again proves to be the springboard for a decent rally."