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Among the biggest risers were banking shares, including Lloyds Banking Group which was up six per cent and Royal Bank of Scotland which gained 5.8 per cent.
Matt Buckland, a dealer at CMC Markets, commented: "The detail of the US plan will likely take some time to disseminate, which could in turn help extend the rally."
The Prudential reported strong annual results, news which was seen as significant for stock market investors.
David Morrison, a market strategist, said: "The Pru results did much to calm nerves and stocks are broadly higher this morning over excitement at leaks coming from the US treasury."
In related news, the US treasury secretary, Timothy Geithner, has reportedly called on the private sector to help purchase billions of dollars of toxic banking assets.
