The FTSE 100 surged towards record levels on Tuesday amid investor relief the new anti-austerity Greek government was attempting to end the impasse with its international creditors over its €240bn bailout.
Britain’s benchmark stock index climbed 89.25 points to 6,871.8, a 1.3pc jump that took the gauge to its best level since September and within 60 points of its highest ever close.
It has been 15 years since the FTSE 100 set its all-time closing high of 6,930.2. The peak was reached on the last trading day of 1999, just before the dotcom bubble burst, although the index flirted with new highs last year.
On Tuesday, investors pushed the FTSE 100 back towards those levels after Yanis Varoufakis, the Greek finance minister, ditched plans to write-down the nation’s debt and instead proposed that the country swaps its outstanding loans for bonds linked to economic growth.
The new measures calmed fears that the standoff between Athens and its creditors would erupt into a fresh eurozone crisis and sparked a rally in stock markets around the world.
The Athens Stock Exchange, which had tumbled in the wake of Syriza’s election victory on January 25, leapt 11.3pc, Spain’s IBEX gained 2.6pc and the CAC 40 in France climbed 1.1pc.
Germany’s DAX advanced 0.6pc to a fresh record of 10,890.95, and almost breached the psychologically-important level of 11,000 during intraday trade. On Wall Street, the Dow Jones Industrial Average jumped 230 points. Yields on Greek bonds also fell as alarm over Athens’ demands started to fade.
Investor attention is now expected to switch to the outcome of a meeting between Mr Varoufakis and Mario Draghi, the head of the European Central Bank, on Wednesday.
Meanwhile, a rally in oil prices also boosted equity markets. Brent crude, which last year crashed from its peak of $ 115 a barrel to less than $ 47 amid a global glut, climbed for a fourth straight day to rise above $ 57.
Investors have been buoyed by signs oil production is declining, lifting the FTSE 100 which is heavily-weighted towards commodity shares such as oil majors BP and Royal Dutch Shell.