FTSE 100 
The blue-chip FTSE 100 index <.FTSE> closed up 0.1 percent at 6,834.77 points, with the index up around 10 percent so far in 2016.
The FTSE 350 bank index <.FTNMX8350> rose 1.3 percent after the Bank of Japan (BoJ) shifted key policies to establish control over interest rate yield curves, instead of its money-printing programme, in a move that lifted financial stocks.
"There's a follow through from the BoJ statement today, so financials are bid on that. The yield curve benefit from Japan on the banks today is quite a strong one," said Zeg Choudhry, managing director of LONTRAD.
Barclays (>> Barclays PLC) outperformed, rising 3.1 percent after HSBC analysts upgraded the bank to "buy" from "neutral".
British banks have suffered since the country voted in June to leave the European Union, with the Bank of England cutting interest rates down to record lows. While those rock-bottom rates have propped up the overall stock market, they risk impacting the profits banks can make via their loans.
However, HSBC's analysts wrote that they reckoned bank equity investors were "too negative on negative rates".
Other financial stocks also benefited, with insurer Legal & General (>> Legal & General Group Plc) climbing 3.7 percent and Credit Suisse analysts recommended that investors stay "overweight" on financials.
"We remain tactically overweight of financials, with a focus on retail banking and GEM (global emerging markets) exposure," wrote the Credit Suisse strategists in a research note.
(Additional reporting by Sudip Kar-Gupta; Editing by Toby Chopra)
By Alistair Smout and Adela Suliman
