The export-heavy FTSE 100 gained 0.9%, with large dollar earners including Diageo, Unilever, British American Tobacco , Reckitt Benckiser boosted by a weaker pound and banks up 0.9%.

Sterling fell 0.55%, extending losses after U.S. consumer prices recorded their largest year-on-year advance since November 1990.

Meanwhile, precious metal miners recouped early losses to end 3.6% higher following the U.S. inflation data, fuelled by an over 1% rally in gold, considered a hedge against rising prices. [GOL/]

Marks & Spencer surged 16.5% to its highest since January 2020, helping the domestically focussed FTSE 250 advance 0.3%, after the clothing and food group raised its full-year outlook for the second time this year.

"Their online aspects are really encouraging, as well as the food business. M&S has been weathering this difficult phase very well and that is why we're seeing such a strong rebound in the share price," said Craig Erlam, a market analyst at Oanda.

The FTSE 100 is up 13.4% this year but has underperformed its European and U.S. peers amid fears over inflation, supply chain problems and surging energy costs.

Heavyweight drugmaker AstraZeneca gained 1.0% after it announced plans to create a separate division for vaccines and antibody therapies.

Cycle retailer Halfords Group Plc jumped 19.8% after it raised its full-year earnings forecast as supply chain disruptions were beginning to ease.

ITV, Britain's biggest free-to-air commercial broadcaster, advanced 15.1% and was the top gainer on the index after saying it expected to deliver record total advertising revenue this year.

(Reporting by Bansari Mayur Kamdar and Amal S in Bengaluru; Editing by Subhranshu Sahu and Bernadette Baum)

By Bansari Mayur Kamdar