The blue-chip FTSE 100 rose 0.7%, led by base metal stocks with miners including Rio Tinto, Glencore, Anglo American and BHP up between 2.6% and 3.1%.
British house prices in June fell in monthly terms for the first time since January as the government prepared to scale back its tax break for home-buyers, mortgage lender Halifax said. However, they rose 8.8% in annual terms.
"There will be a slowdown as life returns to normal and starts to eat into savings and workplaces evaluated their future models," said Danni Hewson, financial analyst at AJ Bell.
"But current low interest rates coupled with the availability of low deposit mortgages will prevent any kind of bubble pop."
Homebuilder stocks have gained 1.5% so far this year on rising home prices and demand for bigger homes, but have largely underperformed the FTSE 100.
Graphics: Homebuilders underperform FTSE 100 in June as tax break ends -
Cheap borrowing costs, higher commodity prices and re-opening optimism have helped the FTSE 100 gain 10.6% so far this year. However, the index has underperformed its European and local mid-cap peers.
After being the top gainers in the morning, energy stocks, down 0.6%, retreated to become the biggest drag on the index amid volatility in oil markets. [O/R]
"OPEC+ haven't been able get a deal together, initially people thought it was a good news. But essentially it means that they will come back with something and that reverse oil prices," said Keith Temperton, equity sales trader at Forte Securities.
Dollar-earning consumer staples stocks, including Unilever, Reckitt Benckiser Group, British American Tobacco and Diageo Plc rose between 0.7% and 1.5%, and were among the top gainers on weaker pound.
The domestically focussed mid-cap index gained 0.3%
British online betting firm 888 down 6.5%, was the biggest drag on the mid-cap index after the company signalled that a reopening of outdoor venues after coronavirus lockdowns was hurting daily revenues in the country.
PageGroup and Robert Walters both gained 3.0% each after the British recruiters raised their annual profit forecasts on increased hiring across their biggest markets last month.
(Reporting by Shashank Nayar and Amal S in Bengaluru; Editing by Subhranshu Sahu and David Gregorio)
By Amal S