The FTSE 100 finished 34.49 points higher at 5,320.26, after closing 0.6 per cent down at 5,285.77 on Tuesday.
New US home construction rose less than expected last month, while consumer prices increased only marginally.
“(The data) dampened fears that the US central bank may be forced to raise rates sooner than anticipated,” said Michael Hewson, analyst at CMC Markets.
That put pressure on the dollar, which fed through to higher metals prices and in turn boosted mining stocks.
Rio Tinto, Xstrata, Anglo American, Lonmin and Kazakhmys were up 1.1 to three per cent.
Royal Bank of Scotland (RBS) lifted its 2010 forecasts for palladium and aluminium prices, and raised its longer-term price view for gold.
Energy stocks were higher as crude prices climbed three per cent. BG Group, Royal Dutch Shell and Cairn Energy added 0.1 to 1.5 per cent.
Banks bounced back after falls on Tuesday and on a report that the Basel Committee on Banking Supervision has agreed effectively to delay enforcement of new capital adequacy rules for major banks.
“If true, this would save major banks from a potential rush to top up their capital base and give them extra time to do so in the manner they would prefer,” said Joshua Raymond, market strategist at City Index.
Barclays, HSBC, Standard Chartered and Lloyds Banking Group rose 0.4 per cent to 2.6 per cent. Royal Bank of Scotland, up 0.7 per cent, was also helped by Citigroup raising its target price for the bank.
Life insurers also gained, led by Resolution, up five per cent. RSA Insurance, Prudential and Legal & General gained 1.3 to 2.8 per cent.
Pharmaceuticals company AstraZeneca gained 0.5 per cent after the US Food and Drug Administration backed the wider use of its cholesterol drug Crestor.
GlaxoSmithKline also added 0.5 per cent. Belgian pharma group Galapagos said it had broadened its arthritis alliance with the company.
Also on the upside, Rentokil Initial was a big blue-chip riser, up 3.4 per cent, buoyed by a price target hike from Deutsche Bank.
The Fed will conclude its two-day policy meeting, with a statement due at 1915 GMT.
“The market will be paying particular attention to the tone of the language from last night’s FOMC meeting statement for evidence about the scaling back of stimulus measures and possible rate changes over the coming months,” CMC’s Hewson said.
The Fed was expected to stick to its super-loose monetary policy stance as high unemployment constrains policymakers’ enthusiasm about the economy’s recent improvement.
The blue-chip index is up 54 per cent from a six-year low touched in March, though it is still 1.6 per cent below its level in mid-September 2008 before the collapse of Lehman Brothers.
Iageo lost 0.8 per cent after Deutsche Bank cut its rating on the drinks company to “hold” from “buy” on valuation grounds. Brewer SABMiller lost 0.3 per cent.
Imperial Tobacco was down 0.5 per cent.