Vodafone's looming 130 million dollar (£84 billion) sale of its stake in Verizon Wireless combined with upbeat economic data from the UK and China to send the FTSE 100 Index soaring.
The top tier climbed 93.3 points to 6506.2, a 1.5% increase, as worries over US military intervention in Syria went on the back burner after denting markets heavily last week.
Blue-chip shares were fuelled by figures showing UK factory output increasing at a rate not seen for two decades, boosting hopes of a broad-based UK recovery.
Manufacturing output rose at the fastest pace since July 1994, while a ctivity hit its best level since February 2011, a purchasing managers' survey showed.
Miners were also buoyed by healthy manufacturing data from China, which improved last month after prolonged weakness , to drive hopes of a growth pick-up in the world's second-biggest economy.
Traders put a gloomy performance last week behind them to begin September with a burst of bullish optimism on the trading floor.
Nervousness about an attack on Syria has been unsettling blue-chip shares but the rejection of action by Britain's Parliament and hesitation on Washington's Capitol Hill seems to have lifted the mood.
The Dax in Frankfurt and the Cac 40 in Paris also advanced strongly, climbing 1.7% and 1.8% respectively.
On the currency markets, continued recovery by the UK's factories helped the pound make strong gains, climbing to 1.55 dollars and 1.18 euros.
Rio Tinto was the second-strongest climber, closing up 122p at 3035p, while Anglo American lifted 57.5p to 1536p and Antofagasta rose by 30.5p to 885.5p.
Vodafone went from strength to strength on the back of its widely-anticipated US deal, building on an 8% rise over the past week after confirming it was in "advanced discussions" about selling its stake in Verizon Wireless to US partner Verizon.
The deal looks set to become the third-biggest in corporate history - boosting hopes of a multi-billion pound cash injection into the economy through payouts of surplus cash to shareholders - effectively another dose of quantitative easing.
The mobile phone giant is expected to use the proceeds for a special dividend of up to £40 billion. Shares were up 6.95p to 213.2p, a 3.4% gain.
Rival BT also got in on the act, following a ratings upgrade from Goldman Sachs amid increased confidence over consolidation in the telecoms sector. Its shares were up 4% or 12.9p to 338.2p.
Oil company stocks, which had been boosted by the prospect of higher prices amid a fresh Middle East conflagration, fell back, with BP off 0.65p to 445.6p and Royal Dutch Shell shedding 8p to 2165p.
Outsourcing firms G4S and Serco, which have been under pressure over alleged mishandling of Government contracts, failed to take advantage of the rally. G4S edged up just 0.9p to 260.9p and Serco was flat at 547.5p.
The biggest risers on the FTSE 100 were Aberdeen Asset Management 15.8p higher to 368p, Rio Tinto up 122p at 3035p, Persimmon 46p higher to 1145p and easyJet 51p stronger to 1284p.
The biggest fallers on the FTSE 100 were Fresnillo, down 28p at 1275p, Randgold Resources off 20p to 5065p, Royal Dutch Shell down 8p to 2165p and Eurasian Natural Resources 0.7p lower to 227.7p.