The blue-chip index and the mid-cap FTSE 250 climbed 1.3% and 0.5%, respectively, with homebuilders <.FTNMX3720> marking their best day in nearly two months as data showed house prices jumped 2% in August, the biggest month-on-month increase since 2004.
Britain's top homebuilder, Barratt Developments Plc jumped 8.6% as it forecast better advance sales and more home completions over the coming year, although it scrapped plans for a special dividend payout after annual profit slumped.
"News of UK house prices hitting record highs may provide some short-term fizz for Barratt and the rest of the sector but there could be a lingering hangover to come," said Russ Mould, investment director at AJ Bell.
The FTSE 100 has bounced since a coronavirus-driven crash in March, but is still about 22% below its January highs, lagging U.S. and European peers, which have been propelled by a raft of global stimulus.
"Investors have begun to regain confidence following some positivity on the economic front (but) the sentiment remains largely cautious as markets are factoring in a slower pace of recovery going ahead," said David Madden, an analyst at CMC Markets.
Media stocks <.FTNMX5550>, beverage companies <.FTNMX3530> and personal goods makers <.FTNMX3760> were among the biggest gainers
"Helping to drive the FTSE was strength in the dollar... against sterling which will benefit the large number of companies on the index with foreign earnings," AJ Bell's Mould said.
The pan-European STOXX 600 index rose 1.5% after four sessions of declines on Wednesday on signs of a recovery in global manufacturing activity. [.EU]
By Shashank Nayar and Shreyashi Sanyal