The London markets closed higher as dovish comments from the Federal Reserve helped to bolster the European markets.
The FTSE 100 closed 15.61 points higher at 7,508.7 points at the end of trading on Friday.
The Dow Jones opened higher on Friday alongside the key European indices after New York Fed president John Williams appeared to suggest that interest rates would be cut at the first sign of a slowdown.
Conor Campbell, financial analyst at Spreadex, said: “With the question now turning to how deep the rate cut will be, rather than the likelihood of the cut itself, the Dow added just shy of 100 points after the bell, pushing it back above 27300 in the process.”
The European markets were also buoyed by the news that a looser monetary policy could be on the horizon.
The German Dax increased by 0.26%, while the French Cac rose by 0.03%.
Sterling fell against the dollar as the Chancellor revealed that the Government accelerated borrowing in June to help balance its books.
The pound was down 0.35% at 1.250 versus the US dollar, and up 0.13% at 1.113 against the euro.
Mr Campbell added: “Sterling is in for an interesting time of it next week – Tuesday sees the results of the Tory leadership race, with Jeremy Hunt or, more likely, Boris Johnson becoming prime minister on Wednesday.”
In stocks, the market reacted positively as ITV confirmed it has inked an agreement with the BBC to launch the Britbox streaming service in the UK.
The broadcasters said Britbox, which they hope will counter competition from US giants, will cost “less than other streaming services”.
Shares in ITV closed up 0.8p at 110.2p on Friday.
The owner of Upper Crust and Caffe Ritazza saw shares rise after posting 2% like-for-like revenue growth in the three months to June, despite warning that sales were hit by the continued grounding of Boeing’s Max 737 planes.
The travel food specialist said that passengers moved away from terminals after planes were grounded worldwide in March by airlines and regulators following two crashes and concerns over safety features.
The food service group saw shares jump by 20p to 701p.
Packaging business DS Smith saw shares slide lower after officials at the competition watchdog warned that its merger with a rival could lead to a rise in prices for customers.
Shares in DS Smith closed lower, down 6.2p at 357.2p, at the end of trading.
Shares in Tesco closed higher despite news that the supermarket giant increased prices on more than 1,000 products in the past two weeks, including staples such as bananas, cheese, pasta and jam.
Tesco shares increased by 1.6p to 238.3p at the close of trading on Friday.
The price of oil moved lower on the back of political tensions between the US and Iran.
The price of a barrel of Brent crude oil fell by 0.78% to 62 US dollars.
The biggest risers on the FTSE 100 were Tui, up 39.2p at 804p, Ocado, up 54p at 1,194.5p, Antofagasta, up 35.4p at 934p, and Johnson Matthey, up 85p at 3,131p.
The biggest fallers on the FTSE 100 were Fresnillo, down 18.6p at 794.8p, WPP, down 21p at 916.8p, Berkeley Group, down 73p at 3,756p, and DS Smith, down 6.2p at 357.2p.