Britain's top share index gained 0.6 percent in early trade on Monday, the first session of 2010, carrying over the end-2009 rally thanks to strength in heavyweight banks, oils, and miners.
At 0907 GMT, the FTSE 100 index was 29.99 points higher at 5,442.87, having reached a fresh pre-Lehman collapse intra-day peak of 5,452.29.
"The markets are roaring away, everybody seems to have walked back in with their buying boots on, but I think nine out of 10 first days of the year start higher: it's not a hard one to call," said Simon Denham, market strategist at Capital Spreads.
The UK blue-chip index gained 15.02 points, or 0.3 percent, to end at 5,412.88 on Dec. 31, registering a 22 percent year-on-year increase for 2009, its biggest gain since 1997.
Banks added the most points to the blue chip index, led by part-nationalised Royal Bank of Scotland and Lloyds Banking Group, up 3.8 and 2.5 percent respectively.
Brazilian lender Itau Unibanco is considering buying stakes in one of the two British banks — Lloyds and RBS — rescued by the UK government during the global credit crisis of 2008, the Sunday Times said.
RBS was also supported by an Exane BNP Paribas upgrade to "outperform" from "neutral".
Elsewhere in the sector, Barclays, HSBC, and Standard Chartered took on 0.8 to 1.4 percent.
Oil majors were in demand as the price of crude rose back above $80 on news that Russia has halted oil supplies to Belarus, and on cold weather in the United States.
BG Group, BP, and Royal Dutch Shell took on 0.4 to 1.1 percent.
Cairn Energy was the top FTSE 100 gainer, up 4.6 percent as the firm secured a second drilling drilling rig for its exploration programme offshore western Greenland.
The news prompted BofA Merrill Lynch to raise its net asset value for Cairn Energy by 27 pence to 385 pence.
Heavyweight miners also added strength to the blue chips as copper prices hit fresh 16-month highs on Monday.
BofA Merrill Lynch also issued a bullish note on European Miners, forecasting 4.4 percent global growth in 2010.
Among the gainers, Xstrata, Eurasian Natural Resources, Antofagasta, Rio Tinto, BHP and Billiton added 0.3 to 1.9 percent.
Retailers moved higher on hopes for strong Christmas and New Year trading. Marks & Spencer, up 1.2 percent, is expected to report a sales increase for the Christmas period for the first time in two years when it delivers its trading update on Wednesday, the Daily Telegraph said on Monday.
Argos-owner Home Retail Group added 2.6 percent helped by an SG Securities upgrade to "buy" from "hold", and DIY retailer Kingfisher gained 2.3 percent.
Among individual gainers, security equipment firm Smiths Group was a strong individual gainer, up 3.3 percent as airports operator BAA said it will introduce body scanners at London Heathrow as soon as it is practical.
On the downside, real estate groups and life insurers, which outperformed in the end-2009 rally, fell back at the start of 2010.
British Land was the top blue chip faller, down 2.4 percent, while Land Securities, Hammerson, and Liberty International shed 1.2 to 1.9 percent.
Among the insurers, Standard Life, Legal & General, and RSA Insurance lost 0.7 to 1.5 percent.
Investors were eyeing the UK December CIPS manufacturing PMI report, due at 0928 GMT on Monday, with a reading of 52.0 expected, up from 51.8 in November.
November UK consumer credit, mortgage lending, and mortgage approval numbers will also be released at 0930 GMT.
December's U.S. ISM manufacturing PMI report is due to be released at 1500 GMT on Monday, with a reading of 54.0 forecast, up from 53.6 in November, and November U.S. construction spending numbers are also due at 1500 GMT.
