The FTSE 100 hit a two-month high on Tuesday as Lloyds Banking Group struck a £1.9 billion credit card deal and a weaker pound helped buoy multinational stocks.
The UK's blue chip index closed higher by 0.38% or 26.80 points to reach 7,043.96 points, its highest level since mid-October.
It was pulled higher by Lloyds Banking Group shares, which rose 1.39p to 63.94p after the company said it had struck a £1.9 billion deal with Bank of America to buy UK credit card business MBNA in its first major acquisition since the financial crisis.
The news also sent Barclays shares higher, up 5.6p to 227.65p .
Sterling's slump helped boost interest in the FTSE 100's multinational stocks, as stronger foreign currencies tend to boost company earnings.
The pound fell to a one-month low against the dollar, down 0.4% at 1.234 as the greenback continued its ascent.
The US dollar continued to hover near 14-year highs after Federal Reserve chair Janet Yellen said in a speech that graduates were entering the "strongest job market in nearly a decade".
Against the euro, the pound was down 0.15% at 1.189.
Across Europe, the French Cac 40 rose 0.56% while the German Dax rose 0.33%.
In oil markets, Brent crude prices were relatively flat, up 0.3% to 55.24 US dollars per barrel (£44.71) as trading slowed in the lead up to the Christmas holiday.
In UK stocks, the London-listed shares of cruise operator Carnival rose 122p to 4,145p as low oil prices and a jump in bookings helped push revenue to 3.9 billion US dollars (£3.15 billion) in the fourth quarter.
However, the company warned that a turnaround in oil prices would raise fuel costs by 200 million US dollars (£161.8 million) next year.
Flybe shares fell 0.25p to 40.75p after announcing that former Air France executive Christine Ourmieres-Widener would take over as chief executive as of January 16, following Saad Hammad's departure in October.
Mr Hammad left by "mutual agreement" in October following more than three years with the group.
Shares in McColl's rose 1.5p to 182p as the convenience store chain won clearance from the competition watchdog for a deal that will see it snap up nearly 300 outlets from the Co-operative Group.
The London Stock Exchange Group saw its shares rise 23p to 2,812p after announcing that it is looking to sell the French clearing arm of LCH to Euronext NV in a bid to drive through its £21 billion tie-up with Deutsche Borse.
The biggest risers on the FTSE 100 were Carnival up 122p at 4,145p, Barclays up 5.6p at 227.65p, Lloyds Banking Group up 1.39p at 63.94p, and Prudential up 32.5p at 1,592.5p.
The biggest fallers on the FTSE 100 were Hikma Pharmaceuticals down 42p at 1,819p, Fresnillo down 23p at 1,091p, Randgold Resources down 70p at 5,635p, Croda International down 39p at 3,169p.
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