A rally of more than 20 percent in Ocado following an "transformative" deal with French supermarket Casino livened up the session for the country's mid cap <.FTMC> stocks.

The FTSE 100 index extended gains to end the session 1 percent higher, the standout European performer thanks to stronger energy and financial stocks.

Shell rose 4 percent, leading gainers on the FTSE. The oil and gas major cancelled an austerity dividend policy and boosted its cash generation forecasts, drawing a line under three years of oil price turmoil.

"This strategy update indicates significant progress," analysts at Jefferies said in a note.

Britain's FTSE 350 bank index rose 0.7 percent. After carrying out its annual health check on lenders, the Bank of England said banks could cope with a "disorderly" Brexit without needing to curb lending or to be bailed out by taxpayers.

It said that for the first time since it started 'stress-testing' banks in 2014, none of Britain's major lenders would need to raise extra capital.

"Overall, the results show that there are pockets of problems in the sector but that the banks are broadly ticking all of the right stress test boxes," said Laurent Frings, Global Head of Credit Research at Aberdeen Standard Investments.

"They are now much better capitalised and more heavily scrutinised by the regulator than before the crisis," he added.

At the single stock level banks showed mixed performances.

Among banks that passed the test without reservations, HSBC rose 1.3 percent and Standard Chartered added 1.1 percent, but Lloyds fell 1 percent.

Barclays was down 0.1 percent and Royal Bank of Scotland gained 1.4 percent.

Elsewhere, Ocado surged as much as 37 percent during the day before ending up 20.8 percent, leading gainers on the mid cap index which rose 0.7 percent.

French supermarket Casino signed a deal with Ocado to use the British online retailer's grocery e-commerce platform to develop its online business, starting with Monoprix.fr.

"This is a transformative deal for Ocado as not only will it expose the firm to a large chunk of the French market, it could also be the launch pad for many more international partnerships," said Neil Wilson, market analyst at ETX Capital.

Elsewhere among mid-caps, Pets at Home fell 10.6 percent following results and news that its CEO Ian Kellett will step down and will be replaced by the head of the company's retail business, Peter Pritchard.

(Reporting by Danilo Masoni and Kit Rees; Editing by Peter Graff)

By Danilo Masoni