SABMiller edged up 0.3 percent after it rejected an improved 42.15 pounds per share offer from Anheuser-Busch InBev, the world's largest brewer. The shares remained below the offer price, indicating some nervousness over whether a deal would be sealed.

The blue-chip FTSE 100 index was up 0.8 percent at 6,376.09 points going into the close of trading, rising for its fifth straight session and hitting its highest level since late August.

The FTSE lost ground in the previous quarter, due mainly to concerns about slower growth in China. The index remains some 10 percent below a record high of 7,122.74 points reached in April, but some traders were encouraged by its recent recovery.

"The FTSE has finally pushed its way through the 6,300 level for the first time since late August. This is more than a little bullish and tends to set the scene for a bigger move higher should the momentum carry," London Capital Group head analyst, Brenda Kelly, said.

The FTSE was also supported by a rebound in the mining sector, which rose 7.8 percent following a rally in metals prices.

Morgan Stanley strategists upgraded miners from "underweight" to "overweight". Shares in Anglo American surged more than 10 percent while smaller rival Lonmin, which is outside the FTSE 100 index, jumped 31 percent.

Tesco's first-half profits slumped 55 percent although Tesco said it was trading ahead of expectations and outperforming rivals. Its shares initially fell nearly 3 percent but then recovered to stand 2.4 percent higher.

"Tesco did not have a great set of numbers, but they were marginally better than expected. In the medium term, it's still a strong business, but in the short term they still have hurdles to overcome in terms of competition from cheaper rivals," Charles Hanover Investments partner, Dafydd Davies, said.

Airline stocks lagged the market rally.

International Consolidated Airlines Group and easyJet both fell after Credit Suisse cut the sector to "equalweight" from "overweight", saying a stabilisation in the oil price would have an effect.

(Additional reporting by Alistair Smout; editing by John Stonestreet)

By Sudip Kar-Gupta