The blue-chip FTSE 100 index ended up 1.3%, with bank stocks, HSBC Holdings, Lloyds Banking group, and Barclays Plc, gaining between 3.6% and 4.3%.
Mining stocks including Rio Tinto, Glencore and Anglo American also boosted the index on stronger metal prices. [MET/L]
"The market is following the optimism from the first day of lockdown easing, as well a bit of good news from the U.S. stimulus ... the virus is under control, lockdown coming to an end and Brexit pretty much done and dusted," said Michael Baker, analyst at ETX Capital.
The domestically focused mid-cap FTSE 250 index rose 1.2%, with industrials and consumer discretionary stocks supporting the index.
The FTSE 100 and the mid-cap index have recovered more than 36% and 70%, respectively, from a coronavirus-driven crash last year on hopes of a swift economic recovery this year.
Last week, Britain's finance minister, Rishi Sunak, announced support for businesses, while on Saturday, the U.S. Senate passed a $1.9 trillion COVID-19 aid bill.
The reopening of England's schools to all pupils on Monday marks one of the first steps towards scaling back virus-led lockdowns in the country, as a vaccination campaign gains steam.
Meanwhile, Bank of England Governor Andrew Bailey painted a cautiously optimistic picture of Britain's economy after the COVID-19 pandemic and did not expect a big jump in inflation.
Among individual movers, Pearson was among the top performers on the FTSE 100, as the education group's new boss set out his plan for the company to grow beyond schools and colleges.
Senior Plc rose 7.2%, even as the British aircraft parts supplier swung to an annual loss, hit by COVID-19-related disruptions to flight travel and Boeing's BA.N 737 MAX crisis.
(Reporting by Shivani Kumaresan and Amal S in Bengaluru; Editing by Rashmi Aich and Matthew Lewis)
By Shivani Kumaresan and Amal S
