London's FTSE 100 index of leading shares has closed above the 4,000-point level for the first time since early January.

The index closed at 4,006.4, up 53.8 points or 1.4% on the day.

The move means the FTSE has risen by more than 20% since its lowest point this year in early March, a few days before the war in Iraq began.

The London market was building on solid gains seen on Friday, and was helped by positive news from the service sector and some major UK firms.

The biggest gainers were news and information group Reuters, which rose 8.7% to 150.5 pence, telecoms firm Cable & Wireless, which climbed 7.4% to 80p, and hotels group Hilton (up 6.7% at 168.25p).

Overall, 81 of the index's constituent shares rose while 19 fell.

Bullish

"The market could go a lot higher than many people presently believe," said David Franklin, director at stockbrokers and fund managers Christows Ltd.

"Gradually as the market has risen there's been more and more action in the mid-caps and smaller companies and a sign of bullish conditions is market breadth.

"That says to me we're in a very bullish condition."

News that the service sector saw a modest rebound last month - according to figures from the Chartered Institute of Purchasing & Supply - helped lift the mood of the market.

Expensive

However, not all market watchers are convinced the FTSE is set for a steady rise.

"I think over the next few months the market could well struggle because we're going into a quiet period of the year," Nigel Beynon, from stockbrokers Goy Harris Cartwright, told BBC News Online.

Mr Beynon said it remained a stock picking market and that some shares still looked expensive even with the market still far from its historical peak.

The FTSE 100 last closed above 4,000 on 6 January. Tuesday's closing figure was the highest close since 2 January.