The benchmark FTSE 100 index hit a fresh five-year high that hasn't been seen since early 2008, and the mid-cap FTSE 250 index also rallied ahead on Tuesday.
The FTSE 100 surged forward by 86 points, or 1.4%, to close at 6,432. The FTSE 250 pushed up by 187 points, or 1.4%, to close at 13,861.
On the large-cap index, Serco Group (SRP) led the charge forward. Shares in the services company rallied by 9% after it raised its annual dividend by 20%.
Miners were also among the main market gainers, with Xstrata (XTA) and Glencore International (GLEN) shares each rallying by 7% and 6%, respectively.
Shares in Standard Chartered (STAN) also popped up by just over 3% after the bank reported its tenth consecutive year of profit growth and hiked its dividend.
This was "a refreshing report following the horror shows from RBS (RBS) and Lloyds (LLOY)," said Marc Kimsey, a senior trader at Accendo Markets.
In the US, the benchmark Dow Jones Industrial Average has hit a new all-time high, topping the high last set in October 2007.
"The question now is whether or not, in the cold light of underlying fundamentals, this level of positivity can be sustained and what degree of profit-taking there will be," said IG market analyst, Brenda Kelly.
"Dovish comments from the US Fed vice chairman last night have definitely helped to underpin London equity markets, with the FTSE 100 succeeding in breaching the 6400 level," said Kelly. "Eurozone PMI data also acted as a timely boon, beating expectations with a reading of 47.9 versus the 47.3 consensus. EU retail sales also managed to exceed the 0.3% month-on-month increase expected, printing a rise of 1.2%."
To see the top winners and losers on the FTSE 100 each day, check out Morningstar's Heat Map.