THE FTSE 100 began the week on the front foot on Monday, but the pound came under late selling pressure as the Chancellor delivered his Budget.
London's top flight rose 86.76 points, or 1.25%, to close at 7,026.32.
David Madden, market analyst at CMC, said: "Equity markets bounced back today as traders swooped in to snap up relatively cheap stocks.
"The bullish mood has spread across Europe, but seeing as the geopolitical and economic risks still persist, the upward move might not last long."
The FTSE 100 was buoyed by HSBC, which was riding high on a solid set of third-quarter results.
The banking giant booked a 28% increase in profit before tax to $5.9 billion (£4.5bn) in the three months to September 30, reflecting strong revenue growth and lower operating expenses.
The results, which beat expectations, also showed that on an adjusted basis, pre-tax profit jumped 16% to $6.2bn (£4.8bn).
Shares closed up 28.8p at 633.8p.
At the other end of the index, Just Eat shares were sent south by a highly critical research note issued by Peel Hunt.
In it, Just Eat was downgraded from sell to hold and had its target price cut from 950p to 520p amid fears over a mooted takeover of Deliveroo by Uber. Peel Hunt argued that Just Eat would come under intense pressure were the deal to go ahead.
James Lockyer, analyst at Peel Hunt, said: "Prompted by rumours surrounding Uber and Deliveroo, we postulate that the two of them (merged or otherwise, let's call them Uberoo), around the world, could create an Uberoo-esque wave that eventually sees the demise of Just Eat.
"Both are capable of out-investing Just Eat in delivery and are entering the more lucrative marketplace sector. We turn bearish for a number of reasons."
Just Eat shares closed down 7.4p at 594.4p.
Sterling, meanwhile, was in the red, despite Chancellor Philip Hammond saying that the Office for Budget Responsibility has raised its growth forecast for the British economy and lowered the forecast for the deficit.
The pound was down 0.2% versus the US dollar at 1.280 and down 0.01% against the euro at 1.124.
Neil Wilson, chief market analyst at Markets.com, said: "Sterling hasn't done much on the Budget with GBPUSD treading water around 1.28 and off its lows of the days although it has dropped a bit lower on the Chancellor's statement having traded as high as 1.2850 ahead of the speech.
"Despite the better growth forecasts for next year the foreign exchange market took this Budget entirely in its stride."
In Europe, Germany's DAX was up 1.2% while France's CAC was 0.44% higher.
A barrel of Brent Crude was trading at 77.4 US dollars, down 0.24%.
The biggest risers on the FTSE 100 were GVC Holdings up 56.5p at 922p, Melrose Industries up 7.65p at 161.65p, HSBC up 28.8p at 633.8p and Evraz up 22.4p at 525.4p.
The biggest fallers on the FTSE 100 were Rolls-Royce down 23.6p at 831.4p, British American Tobacco down 70p at 3,549p Randgold down 116p at 6,300p, and BAE Systems down 9.6p at 522.4p.
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