London's top-flight was up 21.4 points to 6598.2 but the currency was lower as figures showed gross domestic product increased by 2.6 per cent between the third quarter of 2013 and the same period this year, down from a previous estimate of 3 per cent.
With the recovery not as far advanced as previously announced, sterling came under pressure against the US dollar, slipping a cent to its lowest level in 16 months at 1.55. It was also slightly lower versus the euro at just over 1.27.
But the brighter picture for the FTSE 100 saw it build on last week's 3.9 per cent rise. The 'Santa rally' means there are still slim hopes that the top-flight can finish the year higher than its starting level of 6749 - avoiding its first fall since 2011.
The rally came even though the price of Brent crude continued to languish near the 60 US dollars a barrel mark, reflecting signs that Saudi Arabia is focused on maintaining its market share rather than cutting back production.
Elsewhere, Germany's Dax and France's Cac 40 were also ahead while New York's Dow Jones Industrial Average hit new heights as it surpassed 18,000 points for the first time.
Wall Street rallied on revised figures showing the US economy grew at the fastest rate since 2003 in the third quarter.
Meanwhile in London, Tesco recovered some of its recent losses to stand 2 per cent or 3.6p higher at 184.6p while rival Morrisons was 4.4p stronger at 180.4p and Sainsbury's climbed 4.5p to 244.1p.
The first day of trading for Indivior, the pharmaceuticals business spun out of consumer products business Reckitt Benckiser, saw its shares jump by 25 per cent or 30p to 150p.
Reckitt was 110p lower at 5200p after Exane BNP Paribas revisited its rating on the blue-chip stock in the wake of the demerger.
Housebuilders also peppered the fallers' board after the British Bankers Association reported a 'sharp chill' in the housing market after the number of mortgage approvals made to home buyers slid by a fifth in November.
Persimmon fell 21p to 1572p, while FTSE 100 newcomers Barratt Developments lost 6.9p to 459p and Taylor Wimpey dropped 1.8p to 134.7p.
Meanwhile, chocolate maker Thorntons slumped 22 per cent - off 26.2p to 92p - after it warned that its earnings will fall this year because of reduced demand from some supermarkets in the run-up to Christmas.
In October it told the market that it expected to meet full-year pre-tax profit forecasts of £9.65million for the year to June, up almost a third from £7.5million in its last financial year.
However it now expects profits for the current period will fail to grow after a 'significant reduction' in demand from some supermarkets.
The biggest risers in the FTSE 100 Index were Tullow Oil up 12.7p to 419.7p, CRH up 47p to 1559p, Morrisons up 4.4p to 180.4p and Smiths Group up 26p to 1108p.
The biggest fallers in the FTSE 100 Index were Shire down 131p to 4533p, Reckitt Benckiser down 110p to 5200, AstraZeneca down 86.5p to 4516.5p, and Smith & Nephew down 19p to 1089p.
15:00: Reuters reports U.S. stocks opened higher on Tuesday, with both the Dow and S&P 500 setting new intraday records after an unexpectedly strong report on economic growth.
The Dow Jones broke through the 18,000 figure for the first time in early morning trading after strong GDP data.
The U.S. economy grew at its quickest pace in 11 years in the third quarter, the strongest sign yet that growth has decisively shifted into higher gear. The Commerce Department revised its annualised estimate for GDP growth to 5.0 per cent after the economy expanded by 4.6 per cent in the third quarter.
The Dow Jones industrial average rose 54.55 points, or 0.3 percent, to 18,013.99 and the S&P 500 gained 6.51 points, or 0.31 percent, to 2,085.05.
The US economic report helped the UK FTSE 100 rally slightly to 6,597.24, up 20.50 points from the start of the day. The UK benchmark index started strongly but fell mid-morning after revised GDP data showed the economy grew by 2.6 per cent in the year to June 2014, down from the previous figure of 3.1 per cent.
12.40: The pound has weakened today after it emerged UK growth was not as strong as first thought.
Official figures showed gross domestic product increased by 2.6 per cent between the third quarter of 2013 and the same period this year, down from a previous estimate of 3 per cent.
With the recovery not as far advanced as previously announced, the pound came under pressure against the US dollar, slipping to its lowest level in 16 months at $1.55. It was also lower versus the euro.
The picture for the FTSE 100 Index was brighter, with the top flight building on the previous week's 3.9 per cent rise with a gain of 23.3 points to 6,600.
The 'Santa rally' means there are still slim hopes that the FTSE 100 can finish the year higher than its starting level of 6749 - avoiding its first fall since 2011.
