The FTSE 100 Index closed almost 100 points higher today after energy stocks surged and investors eyed a New Year revival in takeover activity.
The deal hopes were lifted after drug maker Sanofi-Aventis agreed to buy US health care products company Chattem and mining equipment maker Bucyrus International purchased Terex's mining equipment division.
With the vast majority of top flight stocks in positive territory, the Footsie finished 97.2 points higher at 5294, a gain of 1.9%.
On the currency markets, the pound dropped around 0.5% against the dollar as traders prepared for Tuesday's third quarter GDP release, which is expected to show the UK economy contracted by 0.1%, rather than the 0.3% previously thought.
Oil explorer Cairn Energy set the pace in the FTSE 100 Index as shares surged almost 5% or 142p higher at 3188p after the company said drilling off the coast of western Greenland will start a year ahead of schedule.
Royal Dutch Shell was also up 48p to 1767p or 3% amid reports of Chinese interest in Nigerian assets up for sale.
Interest in the sector was heightened by the latest meeting of the OPEC oil cartel scheduled for Tuesday, with no change in production levels for 2010 expected.
Shell's rival BP added 14.6p to 591.1p, while explorer Tullow Oil improved 26p to 1278p.
Bankers were also on a firmer footing after suffering last week on worries over the new capital buffers which could be imposed by regulators in Basel to prevent another financial crisis.
Barclays steadied with a gain of more than 3% or 8.75p to 273p, while Standard Chartered lifted 48.5p to 1543p and HSBC was 22.5p dearer at 702.5p.
British Airways was another gainer, up 4.5p to 193p as the airline continued to claw back ground after its successful injunction against a devastating Christmas strike.
Meanwhile cruise ship operator Carnival was on the front foot, adding 53p to 2149p as brokers lifted ratings after Friday's well-received results.
However, temporary power specialist Aggreko made a disappointing start to life as a top flight stock. Shares were 13p lower at 887p following its promotion from the FTSE 250 Index on Friday.
London Stock Exchange was 11.5p down at 706p after it announced plans to buy smaller rival Turquoise and merge it with its Baikal business.
In the second tier, oil services firm Hunting was the top riser, adding 36.5p to 543.5p or 7% after it forecast trading "toward the high end of market expectations" this year.
Johnson Service Group was another strong riser as it announced new banking facilities through to April 2013. The new terms with a consortium of banks including Lloyds and Royal Bank of Scotland is worth £78.5m (€88.2m) and comes after a period of major debt reduction at the Johnsons dry cleaning firm.
Shares rose 3% or 0.75p to 23.25p.
The biggest Footsie risers were Cairn Energy up 142p at 3188p, Prudential 27p higher at 625p, Aviva up 15p at 384.7p and Old Mutual 3.9p higher at 107.3p.
The biggest fallers were London Stock Exchange down 11.5p at 706p, Aggreko off 13p at 887p and Sage down 1p at 223.2p.
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