The top share index powered higher on Tuesday morning, propelled by a string of strong corporate results and a rally in the oil price.
London's benchmark FTSE 100 index <.FTSE> was up 53.77 points, or 1 percent, to 5,724.89 by 1145 GMT.
Despite falling in the past two sessions, the FTSE is up 2.8 percent since the start of the month -- on track for its best showing since a strong rally in October and, potentially, the second best monthly performance in the past year.
The balance of the newsflow has been a small net positive in terms of expectations ... The forecast risk for 2012 numbers isn't as great as it was, said Ian Williams, a strategist at Peel Hunt.
The income you are getting on equities versus other asset classes -- with gilts yielding 2 percent and cash yielding nothing -- is one of the reasons we are seeing this buy on dips mentality.
Solid results also helped boost BSkyB
In a reverse of Monday's trading, miners <.FTNMX1770> and energy companies <.FTNMX0530> led the advance among the sectors.
North Sea Brent crude jumped $3 per barrel, pushing shares in FTSE heavyweight oil major BP
Sentiment also brightened in Europe, after the European Union agreed to a German-inspired pact for stricter budget discipline, which supporters hope will tackle the underlying causes of the region's debt crisis, and Greece reported significant progress in its debt restructuring talks.
The FTSE volatility index -- a gauge of investor risk aversion -- eased to 19.6, after hitting its highest in nearly two weeks on Monday <.VFTSE>. But analysts remained cautious.
While risk has rebounded, we remain cautious: repeated promises of imminent agreement over the past two weeks have delivered nothing as yet, BNP Paribas' analysts said.
On the loser board, grocers Tesco
(Additional Reporting By David Brett; Editing by Jon Loades-Carter)