On a typically quiet summer news day, markets recovered some poise on signs of an improvement in the situation in Ukraine, despite continuing problems in other global trouble spots such as Iraq and Gaza.
After the FTSE 100 lost much of its gains on Friday, investors were nervous the volatility could return, but by the close the index had held on to its increases this time, ending 52.17 points higher at 6741.25. European markets also moved higher, with Germany's Dax up 1.8% and France's Cac closing 1.44% higher.
On Wall Street the Dow Jones Industrial Average was up 158 points or nearly 1% by the time the London market closed.
As well as signs that negotiations to resolve the Ukrainian crisis could have a positive outcome, analysts said the European Central Bank may have to take further action to stimulate the eurozone economy in the wake of a downbeat assessment by Germany's Bundesbank.
Among the FTSE 100 risers Arm added 23.5p to 930.5p after Goldman Sachs put the chip designer on its conviction buy list. The bank said it expected a good second half for the company, which supplies the likes of Apple and Samsung, after recent market weakness. Goldman said:
We see the smartphone inventory correction as substantially resolved, and expect high-end smartphone launches incorporating Arm v8 designs to benefit royalties.
AstraZeneca recovered from recent weakness to end 109p higher at 4201.5p but Tesco dipped 0.05p to 247.95p following weekend reports that new chief executive Dave Lewis might cut the supermarket's dividend.
Royal Mail slipped 0.5p to 435.1p after analysts at Jefferies cut their price target from 420p to 400p and repeated their underperform rating.
On the results front Bovis Homes bounced 36p to 837.5p after the housebuilder said six month operating profit jumped 150% to £51.2m. The company said it would meet market expectations for the full year and had almost hit its 2014 sales target of 3,650 homes by the half year.
Rentokil Initial rose 2.3p to 125.1p after a positive note from Investec. Analyst John Mullane said:
Market opinion remains divided on Rentokil given its chequered past, characterised by a series of false dawns. However, decisive action taken by management to address legacy issues, along with an improvement in the debt profile, puts the group on a firmer footing. The adoption of a credible growth strategy also leaves it well positioned to achieve a step change in operational performance. In our view, this is the time to revisit the Rentokil story – we upgrade from hold to buy with a new 150p target price.
An upbeat production report saw Petra Diamonds put on 9.2p to 199.2p. The company said it would mine around 3.2m carats this year, up 3% on 2013, and was on track to meet its 5m carat target by 2019.
But Egyptian miner Centamin fell 2.2p to 64.3p in the wake of last week's results.
Finally Fox Marble, the quarrying company with assets in Kosovo and Macedonia, finished nearly 7% higher at 17.5p after it completed its acquisition of the Omega Sivec quarry in Macedonia, adding to its portfolio of Sivec marble.