FTSE 100 closes up as sterling slumps against the dollar
Sterling slumped on the back of a strong US dollar as investors placed bets on interest rate hikes by the US Federal Reserve following Donald Trump's surprise election victory.
The pound fell over 1% against the US dollar to 1.246, but made gains against the euro, up 0.4% at 1.162.
It buoyed stocks on the FTSE 100, as listed multinationals tend to benefit from earnings in stronger foreign currencies like the US dollar.
The FTSE 100 closed higher by 0.34% or 22.75 points at 6753.18.
Global currencies lost their foothold against the greenback, as the US dollar index - which is measured against a basket of currencies - hit 100 for the first time since February 2015.
Jasper Lawler, a market analyst at CMC Markets, said that the dollar is strengthening in anticipation of interest rate hikes by the US Federal Reserve.
"Investors are gearing up for a December rate hike in the US, now priced as a 90% likelihood, according to Fed funds futures.
"The promise of fiscal spending by the incoming president should also be inflationary, potentially steepening the pace of rate rises in 2017."
President-elect Donald Trump is expected to spark a rise in US inflation if he follows through with protectionist plans that stand to impact global trade.
It is thought that the Fed would subsequently raise rates as inflation moves towards its 2% target.
Across Europe, the French Cac 40 and German Dax closing higher, up by 0.4% and 0.3%, respectively.
In oil markets, Brent crude was down over 1.8% at 43.71 US dollars per barrel (£35.05) as oversupply continued to dog the market ahead of the Opec cartel's Vienna meeting on November 30.
On the FTSE 100, housebuilder Taylor Wimpey rose 4.5p to 150.1p as it brushed aside Brexit uncertainty and delivered "resilient" property sales, having sold 0.70 homes per site per week in the second half of the year, down slightly from 0.74 over the same period in 2015.
Shares in Tesco were on the rise following a stock upgrade by HSBC, raising investors' hopes that the supermarket would be able to overcome the problems at TescoBank following a major hack earlier this month.
On the second tier index, Irish food-to-go supplier Greencore saw shares soar by 27.8p to 319.7p after striking a £594.3 million deal to buy American peer Peacock Foods.
The sandwich manufacturing giant said the takeover would deliver cost savings of at least 15 million US dollars (£12 million) by 2019, and should be completed by December 30.
Shares in newspaper publisher Johnston Press closed higher by 2.38p at 15.5p after it confirmed it was in talks with Iliffe Media about the possible sale of its East Anglian brands, including the Newmarket Journal and Suffolk Free Press.
The biggest gainers on the FTSE 100 were Barclays up 10.55p at 212.3p, Royal Bank of Scotland Group up 8.8p at 210.4p, Capital up 23p at 573.5p, and Tesco up 7.4p at 205.85p.
The biggest losers on the FTSE 100 were Polymetal International down 41p at 795.5p, Severn Trent down 82p at 2,095p, SSE down 47p at 1436p, and Associated British Foods down 82p at 2,516p.