The blue-chip FTSE 100 climbed 0.7 percent, outperforming Paris and Frankfurt which retreated 0.2 percent and 0.3 percent respectively.

"GBP (sterling) has given up the gains made on Friday morning" after the announcement of a deal between the European Commission and Britain on Brexit divorce terms, Rabobank said in a note.

A lower pound generally supports the FTSE as the weaker currency translates into an accounting boost for large firms with overseas revenues.

Financials added the most points to the index as the Federal Reserve's widely expected rate hike on Wednesday and a deal last week on banking rules fuelled positive sentiment.

HSBC rose 2.2 percent and got an additional boost after the threat of further U.S. penalties for a drug cartel money laundering case was lifted.

Anglo-South African investment bank and asset manager Investec was up 3.5 percent after it said its credit exposure to troubled South African retailer Steinhoff represented only a small portion of its balance sheet.

Standard Chartered rose 1.6 percent and Barclays added 1 percent.

Energy stocks also provided support as oil prices edged higher after a man with a homemade bomb strapped to his body set off an explosion at a New York commuter hub, injuring himself and three other people in what New York Mayor Bill de Blasio called an attempted terrorist attack..

Royal Dutch Shell added 1.3 percent and BP < BP.L> gained 1.1 percent.

Miners also rose with Rio Tinto up 2 percent, Glencore rising 1.7 percent and BHP Billiton adding 2.2 percent.

BAE Systems was flat after Qatar agreed to a $6.7 billion Typhoon combat jet deal.

Babcock, which provides maintenance and training services for the defence industry, saw its shares rise 2 percent after a reassuring update on the adoption of the latest financial reporting rules.

Unilever was stable, up 0.1 percent after reports of a possible new bid in a $7 billion auction for its spreads business.

Whitbread, the owner of Costa Coffee, was the worst performer, down 2.7 percent after its CEO said its different units were not yet ready to stand alone.

Outside blue-chips, telco TalkTalk fell 9.8 percent after Jefferies cut its target price for the stock, the latest downgrade after similar moves from Barclays and JP Morgan.

Inmarsat also fell sharply, down 8.4 percent after Goldman Sachs removed it from its pan-Europe "buy" list and downgraded the stock to "neutral".

(Reporting by Julien Ponthus; Editing by Keith Weir and Ken Ferris)

By Julien Ponthus and Helen Reid