The benchmark advanced to 4,124.9, up 4.2 per cent or 169.3 points, closing above the 4,000-point mark for the first time in more than a month.
The index has swelled by about 9.6 per cent over the last four sessions. If it holds on to its gains until the close tonight, it will have notched up its third best weekly performance; if it replicates the previous session's gains, it will record its best week ever.
The mid-cap FTSE 250 index was also firm, rallying by 4.2 per cent or 275.1 points to 6,816.1 – its highest level since early January.
Sentiment was strong from the start, with overnight rises in the price of industrial metals and a surprise jump in a widely followed gauge of the UK housing market lifting spirits across the market.
But late news of an agreement on a $1 trillion (£679bn) deal at the G20 summit in London provided the key catalyst as the session came to a close, emboldening traders who added more than 37 points to the FTSE 100 in the final hour of trading.
The mining sector led the way, with copper producers such as Kazakhmys, up 17.4 per cent or 68p at 459.5p, and Xstrata, up 11.2 per cent or 57p at 567.5p, tracking gains in the price of the base metal.
Although still off last year's highs, commodities have enjoyed a positive run over recent weeks as investors, worried by the threat of inflation as central banks pour cash into flagging economies, have sought an inflationary hedge. Traders focused on a Merrill Lynch circular, which highlighted the fact that, after eight consecutive months of decline, major commodities indices saw positive returns in March.
"Commodities are a natural instrument for investors concerned about inflation risk, due to their roles as the very base raw materials used to produce the goods we consume in our everyday lives," the broker said.
The Royal Bank of Scotland, 12.4 per cent or 3.1p heavier at 28.2p, led the banks higher. HSBC, which is expected to reveal a strong take-up for its rights issue offer today, climbed to 459p, up 11.8 per cent or 48.25p.
Investors in the sector also welcomed a move by the US Financial Accounting Standards Board, which voted to loosen the so-called mark-to-market rules that have been blamed by some market watchers for inflating the losses incurred by some American lenders. Buyers were also pleased by the latest Nationwide house price index, which unexpectedly jumped by 0.9 per cent in March, stoking hopes of a recovery in the housing market which, in turn, should lift the fortunes of big mortgage lenders.
The news was said to have burnt more than a few short sellers in the housing sector, who were forced to abandon their downside bets.
Reports that Taylor Wimpey, which was more than 23 per cent or 5.5p stronger at 29p, was close to securing a debt deal with lenders also aided the advance, driving Barratt Developments to 107p, up 20.2 per cent or 18p, and Redrow to 176p, up 15.6 per cent or 23.75p.
Elsewhere, Spectris, the precision instrument maker, was 10.5 per cent or 45.2p ahead at 474p amid talk of a possible bid from Siemens, the German engineering group.
Punch Taverns enjoyed a steady ascent to 85.5p, up a heady 25.7 per cent or 17.5p, with traders again citing a bear squeeze as the upturn in the market – and the recent reassuring update from rival pubs group Enterprise Inns, up 16.6 per cent or 13p at 91p – forced short sellers to buy back stock they had hoped would go down in value.
In the wider sector, Greene King climbed to 558p, up 8.1 per cent or 42p, while JD Wetherspoon was 2.7 per cent or 12p ahead at 444.75p.
There was little love for Premier Foods, however. The food producer's stock retreated by 2 per cent or 0.75p to 36.25p as rumours of a possible deal with Kraft, the American food giant, dissipated.
Goldman Sachs, which switched its stance on the shares to "neutral" from "buy", also helped to push Premier Foods' price lower, saying that the recent rally was "as it good as it gets for now".
The gaming group 888 Holdings fell back to 95.5p, down 6.1 per cent or 6.25p, after analysts at Jeffries revised their recommendation to "hold" from "buy".
Sector peer PartyGaming, down 7.2 per cent or 17.5p at 223p, was caught in the downdraft.
Among smaller companies, the Alternative Investment Market-listed executive recruiter Hexagon Human Capital, down more than 23 per cent or 9.5p at 31.5p, announced the termination of offer talks.
The company had been approached in February, and Hexagon said its talks with the bidder had failed to yield a suitable proposal.
Matchtech, the specialist technical recruiter, was also unsettled, losing 10.4 per cent or 15p to 128.5p after its trading update disappointed investors.