Miners fuel FTSE gains as Fed eyes growth

The FTSE was boosted by the US Federal Reserve's promise to keep interest rates - and therefore bond yields - ultra-low for the next couple of years while positive results from miners also contributed to gains.

Fed chief Ben Bernanke said that it may consider further monetary easing and would keep rates near zero until at least late 2014 - longer than previously expected.

Lower interest rates boost the appeal of equities compared to bonds and cut funding costs for companies.

Miners were the highest climbers on London's blue chip index, led by Kazakhmys, up 3.2 per cent. The lift followed it reporting on target output in a market update.

Also in the sector Rio Tinto edged up by three per cent with Fresnillo and Vedanta up more than 2.5 per cent.

Anglo American was up 1.9 per cent after reporting a rise in copper and iron ore output.

Investors in financial stocks were closely monitoring the situation in Greece where negotiations continue between the country's creditors and government over how it can avoid defaulting on its debts.

In early trading Lloyds was up by 1.8 per cent, Barclays 0.3 per cent and RBS 1.6 per cent.

The airline industry also fared well this morning. FTSE 250 listed easyJet, up 7.5 per cent, posted a 16.7 per cent rise in first-quarter revenue.

Nomura said a combination of more realistic forecast assumptions, attractive valuation and lowering capacity growth plans will help the sector. British Airways owner International Airlines rose 2.9 per cent.

On the down side BskyB was the main loser, off by 1.6 per cent. Barclays Capital downgraded the satellite broadcaster to "equalweight" from "overweight". The broker said there was uncertainty around the Premiere League rights auction as well as growth issues.

iPhone chipmaker Arm Holdings also nudged down by one per cent.

BT Group dipped by 0.6 per cent. In Asia the Nikkei closed down 0.3 per cent while the Hang Seng was up by 1.6 per cent.

The Hang Seng gains were also stoked by resource stocks as Jiangxi Copper rose 4.5 per cent and Zijin Mining, China's largest goldminer, jumped 5.6 per cent.

Meanwhile in the US later housing and jobs data for December is due for release.