Investor relief that the new Greek government is attempting to end the impasse with its international creditors helped the FTSE 100 surge towards record levels.
Britain’s benchmark stock index climbed 77 points to 6859, a 1.1pc jump that took the gauge to within 100 points of an all-time high.
It has been 15 years since the FTSE 100 set its record of 6,950. The peak was reached on the last trading day of 1999, just before the dotcom bubble burst. On Tuesday, however, investors pushed British shares close to a new all-time high after Yanis Varoufakis, the Greek finance minister, set out measures to swap outstanding loans for growth-linked bonds.
Fears were growing that the stance taken by the radical left-wing Syriza administration in Athens over Greece’s debts would erupt into a fresh eurozone crisis.
The proposal from Mr Varoufakis was the first sign of the anti-austerity government’s willingness to end a stalemate that Chancellor George Osborne on Monday said was “fast becoming the biggest risk to the global economy”.
Deutsche Bank strategist Jim Reid said:
“Whether the combination of growth linked and perpetual bonds that have been proposed are workable is open to question but it does seem that Syriza have blinked first in this stand-off after a very feisty week one of their new administration.”
European stocks were also galvanised by the conciliatory move. The Athens Stock Exchange surged 7.4pc, while the CAC 40 in France was up 1.2pc and Germany’s DAX gained 1pc.
Bond investors similarly welcomed the Greek proposal, with the yield on the nation’s 10-year debt falling the most since 2012 and yields on three-year notes declining for the first time in seven trading days.
The rebound in oil prices also buoyed stock markets. Brent crude climbed 3.5pc to $56.67 a barrel, continuing a rally that started on Friday evening when data showed a record drop in US rigs, signalling production was starting to decline.
A global supply glut of the commodity saw the price of Brent more than halve from its June peak of $115 last year. The plunge hit the FTSE 100, which is heavily-weighted towards commodity stocks such as BP and Royal Dutch Shell.
Jean-Claude Juncker, the president of the European Commission, said on Tuesday that while Brussels respected Greece’s democratic vote, policymakers would not re-write the European rulebook in order to put Greece on a sustainable growth path.
“Obviously, we have to take account of the democratic expression of the Greek people,” he said. “[But] it’s not just one European country that has expressed what it wants democratically. There are other opinions in Europe, democratically expressed opinions.
“So yes, we are going to have to do a certain amount, but we’re not going to change everything because of one electoral result that some people may like and some people don’t like.”
Original article by The Telegraph