The FTSE 100 hit its highest closing level in a year yesterday, led by banks and miners and spurred by appetite for risky assets as optimism about the pace of global economic recovery intensified.<br /><br />The index closed up 82 points, or 1.6 per cent higher, at 5,124.13 – the highest close since late September last year. It touched a session high of 5,131.26.<br /><br />The FTSE has rallied 21 per cent this quarter and is on track to post its best percentage quarterly gains since the index was launched in 1984. But it is still down around 5 per cent from a year ago, just before the collapse of Lehman Brothers.<br /><br />Banks added the most points to the index, fuelled by risk appetite as markets digested upbeat comments from US Federal Reserve Chairman Ben Bernanke that the recession in the US was likely over.<br /><br /><strong>Barclays, Royal Bank of Scotland </strong>and <strong>HSBC</strong> rose 0.6 to 4.4 per cent.<br /><br />“Investors want to believe that the recession is over. My sense is there is enough legs in this rally to potentially drive stocks a little bit higher before we run out of gas,” said Peter Dixon, economist at <strong>Commerzbank</strong>.<br /><br /><strong>Lloyds Banking Group</strong> rose 4.3 per cent. In sector news, <strong>Barclays</strong> said it will restructure $12.3bn of credit market assets through the establishment and sale of assets to a new vehicle. <br /><br />Encouraging macro-economic figures also supported the market. US retail sales climbed 2.7 per cent in August after declining 0.2 per cent in July. It was the biggest monthly advance since January 2006 and well above market expectations.<br /><br />However, data showed Britain’s jobless rate climbed to its highest level in almost 13 years in July. While there were signs that the pace of layoffs may be slowing, analysts cautioned unemployment queues could lengthen for some time. <br /><br />Miners rose, gaining strength from stronger metals prices. <strong>Xstrata, Fresnillo, Eurasian Natural Resources, Rio Tinto, Randgold Resources </strong>and <strong>BHP Billiton</strong> gained 3 to 7 per cent.<br /><br /><strong>Xstrata</strong> was also lifted by an RBS upgrade to “buy” from “hold”, with an increased target of 1,050p, up from 625. Oil majors raced higher as crude prices hovered near $71 a barrel. <strong>Royal Dutch Shell, BG Group</strong> and <strong>Cairn Energy</strong> rose between 0.5 and 3.1 per cent. <br /><br /><strong>Tullow Oil</strong> made it to the top of the risers list, up 9.2 per cent, as the company said it was part of a consortium of oil companies which struck oil offshore Sierra Leone.