London's blue chip share index raced higher amid hopes of an imminent deal to end America's partial government shutdown and stop the country defaulting on its debt.
Republicans reportedly said a vote on a new plan to end the two-week political deadlock was close as talks ramp up ahead of Thursday's deadline for the US to raise its £10.5 trillion debt limit.
The FTSE 100 Index closed 41.5 points higher, at 6549.1, despite early session losses on Wall Street, with the Dow Jones Industrial Average around 30 points lower after a four-day winning streak.
Optimism over a resolution to the US stalemate also saw further strong gains on the Dax in Germany and France's Cac 40.
IG market analyst David Madden said: "The dark clouds that were hanging over Washington are starting to pass as negotiations between the Democrats and Republicans improve.
"The fear of a US default has left some investors paralysed, but the progress that has been made could pave the way for a deal and that sentiment is driving stocks higher."
Official figures revealing that inflation remained unchanged at 2.7% in September had a mixed effect on the pound, which held firm at just under 1.60 US dollars, but edged higher at 1.18 euros.
The removal of a potential blow to the global economic recovery cheered mining stocks, with Rio Tinto leading the way with a 131p rise to 3215p.
It was also a significant session for Royal Mail, which began full trading on the London Stock Exchange after two days of conditional dealings.
Shares gained another 14p to 489p, making them nearly 50% more valuable than the Government's price tag last week.
It means small investors who were allocated shares worth £750 are sitting on paper profits of around £360 since Friday morning.
Luxury goods group Burberry was the biggest faller in the FTSE 100 Index after its surprise announcement that chief executive Angela Ahrendts is leaving the firm to join technology giant Apple.
She is being replaced by Yorkshire-born Christopher Bailey, who will retain his role as chief creative officer.
Shares declined 8% or 121p to 1464p as the company revealed 17% growth in underlying retail sales in the six months to the end of September.
Analysts expressed concern at the burden next year's restructuring may place on Mr Bailey, who has played a key role in the company's strong performance in recent years.
In corporate news, shares in housebuilder Bellway lifted 5% or 67p to 1453p after it announced a 34% jump in full-year profits to £140.9 million and said it planned to increase volumes by 15% this year.
The biggest FTSE 100 risers were Rio Tinto up 131p to 3215p, Petrofac ahead 50p to 1410p, Aberdeen Asset Management 13.4p higher at 410.3p and ARM Holdings up 31.5p at 1018p.
The biggest FTSE 100 fallers were Burberry down 121p to 1464p, Capita off 36.5p to 970.5p, Tullow Oil 13p lower at 987p and Sage Group down 3.7p to 320p.