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THE LONDON REPORT

BRITAIN&rsquo;S top share index ended sharply higher yesterday, snapping a four-day losing streak, with commodity and banking stocks rallying after comments by a senior US Federal Reserve official.<br /><br />The FTSE 100 index finished up 104.09 points, or 2 per cent, at 5,355.50 and recorded its biggest one-day percentage rise in more than six weeks. The index closed 0.3 per cent lower on Friday after falling in the previous three sessions.<br /><br />The UK blue chip index is up 20.8 per cent this year and has soared more than 50 per cent since touching a six year trough in March, but remains 1.1 per cent off levels prior to Lehman Brothers&rsquo; collapse.<br /><br />&ldquo;London shares have raced ahead today, as the dollar&rsquo;s recent strength tapered away after weekend comments by a Federal Reserve board member that monetary policy would remain loose into 2011,&rdquo; said Michael Hewson, analyst at CMC Markets.<br /><br />&ldquo;These comments prompted a renewed appetite for risk which has buoyed interest in mining and banking shares across the board,&rdquo; he added.<br /><br />St. Louis Federal Reserve President James Bullard said on Sunday the Fed should keep alive its mortgage-related assets purchase program beyond a planned end date to help stimulate the economy. <br /><br />Banking issues, which tend to be beneficiaries of increasing risk appetite, rose strongly. Barclays Standard Chartered and Royal Bank of Scotland rose 2.7 to 5 per cent.<br /><br />Lloyds Banking Group added 3.8 per cent after it said it had agreed to swap &pound;8.78bn of bonds as part of a deal aimed at funding its exit from a costly state-backed insurance scheme for bad debts. <br /><br />Miners posted chunky gains as metals prices rose across the board, bolstered by a weaker dollar, with gold touching new historic highs during the session.<br /><br />Eurasian Natural Resources, Randgold Resources, Fresnillo , Lonmin, Xstrata, and Rio Tinto gained 2.8 to 4.3 per cent.<br /><br />&ldquo;With no end in sight for the dollar&rsquo;s slump, gold&rsquo;s success looks set to continue pushing the FTSE towards the psychological 5,500 barrier,&rdquo; said Philip Gillett, sales trader at IG Index.<br /><br />Sales of previously owned U.S. homes rose in October at a faster-than-expected pace to the highest in more than two-and-a-half years as buyers rushed to take advantage of a popular tax credit. <br /><br />The data strengthened risk appetite, with energy stocks in demand as crude prices also benefited from the weaker dollar.<br /><br />BP, Royal Dutch Shell and BG Group added 1.2 to 2.1 percent.<br /><br />Tullow Oil bucked the trend, shedding 0.3 percent as investors assessed the implications of the sale by Heritage Oil of its Ugandan operations, in which Tullow is a 50 percent partner.<br /><br />Mid-cap explorer Heritage shed 5.1 per cent as the news of the Ugandan disposal to Italy&rsquo;s Eni for up to $1.5bn was balanced by the ending of merger talks with Turkey&rsquo;s Genel.