Barclays gained 8.4 percent, leading FTSE 100 gainers and adding over 12 points to the index alone, after unveiling plans to slash annual costs by up to 2 billion pounds ($3 billion).
The bank plans to prune its investment bank and axe at least 3,700 jobs. It also raised its dividend and reported a 26 percent rise in adjusted pretax profit for 2012.
\"They\'re not going to change things overnight - it\'s a huge overhaul. But they are taking things on board and pushing them in the right direction,\" said Richard Curr, head of dealing at Prime Markets, adding that technical factors supported Barclays\' surge.
\"We were looking for a firm break of the (January) high at 307p, and once it got up to 310p by mid-morning, it was clear that it was breaking out.\"
The stock hit 325p for the first time since February 2011, and was the most heavily traded stock in the index, trading over three times its 90-day average volume.
Lloyds and Royal Bank of Scotland were the second and third biggest gainers, rising 5.1 percent and 4.1 percent respectively, with traders citing the implications of the Barclays news for a sector seeking to reassure investors after years of crisis.
The FTSE 100 closed up 61.32 points, or 1 percent higher, at 6,338.38 points, with banks alone adding over 27 points to the index.
The day was the index\'s best session since the start of the month, with banks helping it return to 6,300 for the first time this week.
The index rose around 8 percent in January to reach a 2013 peak of 6,354.46 points, before slipping back over the course of February to trade below 6,300.
\"The main trend is up despite the corrective break last week. Typically, buyers look for value during a correction since they are confident in trading the trend,\" James Hyerczyk, technical analyst at Autochartist, said in a trading note.
While 6,300 acted as a support for the index during January, it had put a cap on the market during February until now.
The rally was broad-based, with every sector bar materials contributing to the rally, including stocks that are usually less sensitive to swings in economic optimism.
Supporting the day\'s gains was a late surge by pharmaceutical company Reckitt Benckiser, up 3 percent after striking a deal to sell Bristol-Myers Squibb drugs in Latin America.
\"The stock was rampant all of last year, and the market obviously likes this deal,\" Curr said.
\"I don\'t know whether you\'d want to be buying it right here though, as it\'s a nice safe stock ... If things started to get a bit more ugly, however, it might be a stock that you\'d want to go back to.\"
($1 = 0.6385 British pounds)