A raft of strong results and the fading threat of war between Russia and Ukraine saw Monday's steep losses completely erased yesterday.
The blue-chip FTSE 100 index closed up 115.4 points at 6,823.8, above Friday's close, as traders pushed Russia to the back of their minds. But Toby Morris, a senior sales trader at CMC Markets, warned that "the bulls may well have jumped the gun", saying: "This Russia/Ukraine stand-off has huge implications for energy supplies in mainland Europe and will affect lots of UK firms who have exposure in the region."
The biggest winner from the rally was equipment hire specialist Ashtead, boosted by surging third-quarter profits and a raised full-year outlook. Liberum, Panmure and Peel Hunt upped their target prices for the company, which added 110p to 956p.
Meanwhile precious metal miners, who had benefited from investor fears over Ukraine, were on the wrong end of a sell-off. The worst hit was Fresnillo, which revealed that pre-tax profits fell by 64 per cent last year. The Mexican-focused miner saw its shares dig down 45.5p to 924.5p.
Royal Mail was also at the bottom of the index after Credit Suisse initiated coverage with an "underperform" rating. The bank reckons intensifying competition from the likes of TNT Post will squeeze margins. The postie was flat at 594p.
Outgoing Burberry chief executive Angela Ahrendts handed about £980,000 to her and her husband's charity by selling 65,000 shares in the luxury label. The sell-off will enable the charity, set up in 2011, to make donations. Burberry was up 33p to 1544p.
On the mid-cap index, TV set-top boxes maker Pace climbed to a 12-year high after reporting a 22.5 per cent rise in full-year profits, thanks to demand for its media servers in the US. Pace ticked up 44p to 447.6p.
Sports rights group Perform was also up after a strategy update. The group said it planned to rein in costs in an attempt to "rebuild trust" with investors after a calamitous profit warning in December that saw shares collapse by 50 per cent. Perform added 44.5p to 277p.Reuse content