The blue-chip index ended 1.7% higher, with Compass Group, International Consolidated Airlines, Whitbread, and Rolls-Royce among the top gainers.
The domestically focussed mid-cap index rose 1.9%, marking its best day since January 2020. The index was boosted by a 4.4% gain in travel sub-index with Cineworld, Carnival, SSP Group, and EasyJet gaining between 4.3% and 7.5%.
Shares of the British fashion retailer surged 7.5% after it said it had soundly beaten its expectations for full-price sales and, as a result, was increasing its profit forecast.
"We've seen the panic hit the market and then now we're are back to normal. Given the uncertainties around the economic recovery for the rest of the year, it pretty much assures the investors that central banks will remain cautious, cementing the hope that interest rate lifts are not going to happen next year," said Edward Moya, senior market analyst at OANDA.
The FTSE 100 has risen 8.3% so far this year, supported by cheap borrowing costs and optimism around economic re-opening, although a recent jump in COVID-19 cases, higher inflation levels and hawkish tone from central banks on tapering of interest rates have capped those gains.
A survey showed UK's economic bounce-back from lockdowns cooled in June despite a surge in business for the country's hospitality sector, echoing signs that the recovery has lost some of its pace.
Among other stocks, media group Future jumped 9.2% and was among the top boost to the mid-cap index after it said it expects its full-year profitability to be ahead of expectations.
Royal Mail Plc dropped 2.7% to the bottom of the FTSE 100 after it said fewer parcels were being delivered to homes as pandemic restrictions eased across the country, even as it reported a 12.5% rise in first-quarter group revenue.
Private equity firm Bridgepoint up 29.1%, saw its value rise by more than a fifth on its London stock market debut.
STOXX 600 on pace to recover from Monday's rout
(Reporting by Shashank Nayar and Amal S in Bengaluru; Editing by Shailesh Kuber, Uttaresh.V and David Evans)
By Shashank Nayar and Amal S