The FTSE 100 closed up 41 points at 6,898.13, its second-highest close ever, and just a whisker away from its all-time high of f 6,930. This was hit on the last trading day of 1999 when markets were swelling over tech stocks.
Economic data released by the statistics office showed inflation has fallen to an all-time low of 0.3 per cent, as global oil prices continue to struggle and a bitter supermarket price war which has depressed food prices rages.
This was cheered by investors, who have listened to Bank of England governor Mark Carney’s arguments that low inflation will be a boon for economic growth, boosting household incomes and consumer spending.
The market shrugged off concerns over the collapse of talks between Greece and some of its international lenders, which descended into a war of words after Greece said it had been given a dramatically different draft document to the one it had agreed to.
But optimism returned later in the day, after signs Greek banks would continue to get emergency funding despite a breakdown in debt talks between Athens and Eurozone finance ministers.