Market watchers said the dollar's fall to an 11-year low against the pound dragged AstraZeneca down 2.1 percent and GlaxoSmithKline 1.4 percent and cast a shadow over oil sticks, with Shell falling 0.4 percent.
AstraZeneca also suffered after a US newspaper report that the firm faced risks from two new drugs aimed at cutting cholesterol and the risk of strokes.
The blue chip index closed 3.1 points higher at 4,513.3 points, extending its rally from mid-December to 180 points or 4.2 percent and matching its record run of 11 consecutive higher closes scored in May 1997.
"We've seen a very big rally in UK equities in December. We haven't seen it on heavy volume. The question is whether it was a quiet period rally, which we've seen from time to time, or something more meaningful," said Alex Scott at Seven Investment.
"There's enough optimism out there, enough momentum probably still in the economic data we're seeing to carry us a little further forward," he added.
Accountancy software firm Sage topped the FTSE leader board with a four percent rise after SG Cowen raised its ratings on Dell and Microsoft and after US software firm Siebel raised its fourth-quarter earnings estimate.
Europe's biggest home improvement firm, Kingfisher, closed 2.5 percent higher after a weekend newspaper report that the world number-one player, Home Depot of the United States, was considering a bid.
Traders said a move for Kingfisher could give the FTSE a fresh boost, though some questioned the timing of a potential approach, particularly from the United States.
"Home Depot is of a size where it could swallow Kingfisher without too much trouble but you come back to the dollar issue. Is it the right time for a US company to be buying overseas assets?" said one trader.
Retailer shares remained under pressure from a batch of profit warnings in the sector ahead of trading statements that will detail their business over the key Christmas period.
Health and beauty product retailer Boots fell 2.9 percent after Tesco, Britain's biggest supermarket chain, announced long-term price cuts in all areas but with a focus on health and beauty and baby products. Tesco shares were down 1.2 percent, while rival supermarket operator Sainsbury was the top loser, down 2.6 percent.
The mobile telecom sector was strong after a number of upgrades, with Vodafone up 2.7 percent and sector peer mmO2 one percent higher.