The FTSE 100 rallied above the 5800 level in early trade on news of a clutch of planned domestic and international takeover deals.

Firmer futures and stronger overseas markets also added to the momentum.

The index jumped 88.5 points or 1.6% to 5806.

The broader indices also performed well.

On the domestic front, the BTR Siebe merger grabbed the most attention, although analysts said that in reality Siebe had been the buyer.

"The market perception is that Siebe usually makes a success of its acquisitions" said Teather & Greenwood salesman Peter Caulkett.

The two companies have agreed a deal which will create the world's largest controls and automation group, valued initially at £7.6bn.

BTR stock jumped 24% in turnover of 13m shares, with Siebe ahead by a more modest 5% in a third of that volume.

Guardian Royal Exchange rose 10.7% after confirming that it is considering possible offers, which analysts said could fetch more than £3bn.

The company, valued at £2.71bn, has been linked with Axa-UAP and AGF of France, Germany's Allianz and US company AIG.

EMI dropped 4.3% on profit-taking after confirming it has held informal talks with German media group Bertelsmann recently rather than discussions with News Corporation as market rumours had alleged last Friday.

Overseas, the Dow Jones rose 1.1% in a bank-led session last Friday.

This was followed by reports over the weekend that Deutsche Bank was close to buying Bankers Trust for $9.5bn.