Sharecast - At 0850 GMT, the FTSE 100 was up 1.1% at 7,521.40.
Susannah Streeter, head of money and markets at Hargreaves Lansdown (LON:HRGV), said: "Investors have a spring in their step, as hopes rise that the fight against inflation is gaining ground. The wave of euphoria which washed over Wall Street, after softer than expected data on prices rises, is still lapping over indices, and the FTSE 100 looks set for positive early trade after UK inflation also dipped by more than expected in October, taking a big step downwards.
"Some better-than-expected data on the Chinese economy should also provide support for commodity focused stocks."
Figures released earlier by the Office for National Statistics showed that inflation fell to a two-year low in October as energy prices eased after the energy price cap was cut.
The annual rate of consumer price inflation declined to 4.6% from 6.7% in September, beating economists’ expectations for a fall to 4.8%.
The largest downward contribution to the monthly change in inflation came from housing and household services, the ONS said, where the annual rate for CPI was the lowest since records began in January 1950.
The figures showed that gas costs fell by 31%, versus a 1.7% increase in September. Meanwhile, electricity costs were down 15.6% in October compared with a 6.7% rise the month before.
ONS chief economist Grant Fitzner said: "Inflation fell substantially on the month as last year’s steep rise in energy costs has been followed by a small reduction in the energy price cap this year.
"Food prices were little changed on the month, after rising this time last year, while hotel prices fell, both helping to push inflation to its lowest rate for two years.”
On a monthly basis, CPI was unchanged in October, compared with a rise of 2.0% last year.
In equity markets, Experian (LON:EXPN) surged as it delivered a solid set of first-half results with all regions contributing positively to growth, and reiterated its guidance for the full year.
SSE (LON:SSE) was also in the black as its half-year earnings came in above expectations.
Housebuilders were among the best performers as the drop in inflation boosted hopes of interest rate cuts. Taylor Wimpey (LON:TW), Barratt Developments (LON:BDEV), Persimmon (LON:PSN), Crest Nicholson (LON:CRST) and Berkeley all rose sharply.
Market Movers
FTSE 100 (UKX) 7,521.40 1.09%
FTSE 250 (MCX) 18,721.07 1.00%
techMARK (TASX) 4,110.56 0.60%
FTSE 100 - Risers
Experian (EXPN) 2,821.00p 5.22%
St James's Place (STJ) 681.80p 3.21%
SSE (SSE) 1,764.00p 3.07%
Endeavour Mining (EDV (LON:EDV)) 1,706.00p 2.71%
Anglo American (JO:AGLJ) (AAL) 2,201.50p 2.71%
Fresnillo (LON:FRES) 549.40p 2.69%
International Consolidated Airlines Group (LON:ICAG) SA (CDI) (IAG) 157.90p 2.60%
Hargreaves Lansdown (HL.) 762.00p 2.58%
Spirax-Sarco Engineering (SPX) 9,024.00p 2.22%
Taylor Wimpey (TW.) 126.85p 2.17%
FTSE 100 - Fallers
Ocado Group (LON:OCDO) 559.40p -0.92%
CRH (CDI) (LON:CRH) 4,874.00p -0.77%
Centrica (LON:CNA) 149.30p -0.33%
Vodafone Group (LON:VOD) 72.94p -0.23%
BP (LON:BP.) 480.15p -0.17%
Pearson (LON:PSON) 963.00p -0.15%
BAE Systems (LON:BAES) (BA.) 1,071.50p -0.14%
Sage Group (LON:SGE) 982.40p -0.02%
Dechra Pharmaceuticals (LON:DPH) 3,786.00p 0.00%
DCC (CDI) (LON:DCC) 5,252.00p 0.08%
FTSE 250 - Risers
Crest Nicholson Holdings (CRST) 198.80p 6.08%
Ceres Power Holdings (LON:CWR) 218.20p 5.92%
Intermediate Capital Group (LON:ICP) 1,519.00p 4.43%
Aston Martin Lagonda Global Holdings (AML) 224.40p 4.28%
CLS Holdings (CLI) 104.00p 4.00%
British Land Company (BLND) 363.90p 3.82%
Oxford Instruments (LON:OXIG) 2,130.00p 3.65%
Digital 9 Infrastructure NPV (DGI9) 50.40p 3.28%
Genuit Group (GEN) 301.50p 3.25%
Future (FUTR (LON:FUTR)) 965.50p 3.15%
FTSE 250 - Fallers
Barr (A.G.) (BAG) 490.00p -2.78%
Indivior (INDV) 1,320.00p -2.00%
Pacific Horizon Inv Trust (PHI) 529.00p -1.86%
4Imprint Group (FOUR) 4,375.00p -1.69%
ICG Enterprise Trust (ICGT) 1,210.00p -1.14%
Impax (LON:IEM) Environmental Markets (IEM) 363.00p -1.09%
Alliance Trust (LON:ATST) 1,048.00p -0.95%
BH Macro Ltd. GBP Shares (BHMG) 363.50p -0.82%
AVI Global Trust (AGT) 204.00p -0.73%
Schroder Asia Pacific Fund (SDP) 483.00p -0.72%