Analysts attributed the latest rise to investors' general mood of optimism about corporate earnings and the economy.

The top gainers during Thursday's trading included Intercontinental Hotels, Standard Chartered Bank and chemicals firm ICI. All rose by about 4% while the index of the top 100 companies was up 1.4%.

The bluechip FTSE 100 has risen steadily in recent months and is now up 29% from its 2003 low of 3,287 touched on 12 March.

Tense times

Stock markets in Frankfurt, Paris, Amsterdam and Milan also showed solid gains on Thursday.

In New York, the Dow Jones index was modestly higher in late morning trading.

Stockmarkets around the world tumbled in the summer of 2002 as investors took fright at a slew of corporate accounting scandals which had begun with collapse of US energy trader Enron.

Worries about the trustworthiness of accounts issued by even major firms mingled with fears about a slack global economy.

Nervousness over the US-led war with Iraq triggered another sharp dip in the FTSE.

Better days

But investors' confidence now appears to be returning, along with signs of improving corporate profits, according to Derek Mitchell, director of UK equities at Isis Asset Management in London.

"The run of economic data and company news we've had has been fine. There's been nothing in there to cause any shock to the market," he said.

"That's beginning to give the market confidence that better times are here and we can look forward," Mr Mitchell added.