Around £10.8 billion was added to the value of UK blue chips as London’s FTSE 100 Index leapt to its highest level for nearly two years.
Encouraging US job figures helped overshadow fears over the UK economy, sending the top flight another 42.5 points higher to 6089.8 - a level not seen since February 2011.
The Dow Jones Industrial Average on Wall Street also edged higher in early trade after a closely watched report showed US employers added 155,000 jobs last month, while hiring was also stronger in November than first thought.
Investors were cheered by the solid US jobs growth, even though it failed to bring the rate of US unemployment down from 7.8%.
The FTSE 100 smashed through the 6000 barrier on Tuesday after America secured a last-minute deal to avoid devastating fiscal cliff measures of tax hikes and spending cuts.
Today’s gains came despite early session falls after minutes of the most recent Federal Reserve meeting showed policymakers were divided over how long the central bank should keep buying bonds to support the economy.
The economic climate in the UK was also in the spotlight after figures suggested the powerhouse services sector shrank last month for the first time in two years.
The Markit/CIPS purchasing managers’ index (PMI) survey showed a reading of 48.9 in December, down from 50.2 in November and below the 50 mark separating growth from contraction.
Experts said the decline in the sector, which makes up around 75% of total output, gave another signal that the economy went back into reverse in the final quarter of 2012.
The pound dropped on the services sector gloom, hit also by a stronger dollar on expectations for less bond buying in the US. Sterling fell to $1.60 and just below 1.23 euros.
The biggest FTSE 100 risers were BP up 11.8p to 453.5p, Hargreaves Lansdown ahead 17p to 721p, Burberry 29p higher at 1290p and Schroders up 39p to 1802p.
The biggest FTSE 100 fallers were Randgold Resources down 255p to 5975p, Fresnillo off 75p to 1810p, Polymetal International 45p lower at 1174p and Marks & Spencer down 12p to 376.4p.
