The FTSE 250 outperformed, climbing over 4%, reflecting strong momentum across domestically focused companies.
A sharp drop in oil prices weighed on energy giants like BP and Shell, both falling more than 5%.
Lower crude prices triggered a rotation into rate-sensitive sectors, with banks, homebuilders, and travel stocks leading gains.
Markets also adjusted interest rate expectations, with investors scaling back forecasts for tightening by the Bank of England.
The shift in outlook reflects easing inflation concerns, as declining energy costs reduce pressure on consumer prices.
Despite the rally, recent data showed UK housing demand weakening, highlighting lingering economic uncertainty.
Overall, the rebound underscores renewed risk appetite, though investors remain cautious about sustaining momentum in a volatile environment.
