Leading shares moved to their highest level since the middle of June - and within a whisker of a seven year high - thanks to another strong performance from the miners.
But financial shares and housebuilders were in the doldrums, as was software group Sage after it revealed problems in its US business.
Vedanta Resources led the way, up 127p to £23.17 while Antofagasta added 35p to 871.5p, Xstrata was 137p better at £35.92 and Rio Tinto rose 155p to £45.63. The moves were prompted by the continuing strength in metals prices, along with a smattering of bid speculation (BHP for Rio again). Yesterday Credit Suisse issued a positive note on the sector, saying the miners were due for a strong rally.
Vedanta also benefited from a buy note from Citigroup with a £23.50 target.
The FTSE 100 closed 91.5 points better at 6724.5, helped by a positive start on Wall Street after Wal-Mart raised its profit forecasts, with the S&P 500 heading for new heights.
The last time the FTSE 100 was this high was on June 15 when it reached 6732.4. Before that, you have to go back as far asSeptember 5 2000 when it stood at 6752.5.
Part of today's increase was due to revived hopes of a UK interest rate cut after the latest survey from the Royal Institution of Chartered Surveyors showed house prices declining for the second month in a row.
That news did not sit well with investors in the big builders though. Persimmon fell 42p to £10.03, while Barratt Developments lost 26.5p to 722p. In a note on the sector Panmure Gordon repeated its sell recommendation on Barratt with a 700p target price. Its favourite housebuilders were Persimmon, and Redrow - down 17.5p to 388.5p - as a takeover candidate.
The volatile life of Northern Rock continued, as chancellor Alistair Darling made a statement to the House of Commons on the problems at the mortgage bank. Its shares fell 15.5p to 258p as Deutsche Bank issued a sell note and cut its target price form 370p to 225p.
Deutsche has also re-started coverage of Royal Bank of Scotland, now the ABN Amro saga has finally ended. It said: "We see mounting profit pressures on the existing businesses (reducing our forecasts for these by 6% in 2007 and 11% in 2008) and significant risks over the ABN Amro integration. We reinstate coverage with a hold and 570p target price." RBS slipped 6p to 553p.
Traders said many investors had now decided to take profits from banking shares after their recovery from credit crunch-inspired lows, and moved their money back into the miners.
But there were some bright spots among the financials. Bradford & Bingley added 2.75p to 281.5p on talk that a US roadshow was going well and that UBS was pushing the stock. Standard Life Investments has also just declared a 3.21% stake.
There was speculative interest in fund management group Schroders, up 60p to £15.60, while Vodafone rose 8.5p to 179.5p on talk that chief executive Arun Sarin might be stepping down. Analysts said it was more likely Sarin would go sometime next year, rather than immediately. They said a confident outlook statement from Spain's Telefónica was also helping Vodafone shares move higher.
Defence and aerospace group BAE Systems climbed 9.5p to 506.5p. Cazenove was upbeat about the company's prospects: "We continue to see positive newsflow on the horizon for BAE Systems ahead of their analyst trip next week. In particular we believe the impact of recent budget allocation to the MRAP 2 [mine resistant vehicles] in the US is being underestimated by the market, but we see scope for positive newsflow from all three operating regions and believe that the strong balance sheet continues to offer opportunities."
The company has an investor day planned in the US for next Thursday and Friday.
Now to Sage. Its shares slumped 8.5p to 243.25p after it reported lower-than-expected growth in its North American division and said a number of top managers there were leaving immediately.
Also falling was retail group WH Smith, down 27p to 393p. Its profits came in at the top end of forecasts but it warned of slowing growth in its high street stores.
The oil groups saw a revival today after yesterday's talk of downgrades for Royal Dutch Shell. Shell added 49p to £20.34 while BP rose 13.5p to 593.5p as it unveiled its restructuring plans. Both were boosted by a jump in the crude oil price to around $83 a barrel after US supplies showed a surprise fall last week.
In the oil services sector there was a spate of takeover talk, in the wake of 3i's move on Abbot Group.
Hunting rose 73p to 783p as Evolution Securities said the group could be broken up into energy services and Canada's Gibson Energy.
"We suspect that unless the company moves this way then a third party may do it for them," said Evo.
The broker also tipped Expro International, up 25p to £10.61p, as a possible target for US group Halliburton. It believes that may be more likely than Halliburton's supposed interest in US rival Baker Hughes.
"Halliburton's chief executive has indicated a strategy of acquisitions of $1-2bn to broaden the global business rather than a mega merger (such as the rumours with Baker Hughes) which would only focus the business on the US," said Evo. "Expro's downhole business is complementary with such a company and Expro's rigless intervention system currently under development with BP could offer huge upside."
Lower down the market debt consolidator Accuma jumped 9p to 30.5p after revealing a bid approach while dental equipment group Astek added 32% to 3.125p after it said it was in reverse takeover talks, prompting its shares to be suspended.
But recruitment firm Imprint fell 38.5p to 82.25p after founder Brian Hamill resigned as chief executive after trading in September was below expectations.
Finally, entrepreneur Charles Denton continued his almost daily move to acquire more shares in e-learning business Intellego, steady at 2.25p. He has now edged his stake up to 23.35%.