The FTSE 100 opened 1.33 per cent higher this morning, at 6,142.9 points, after the US Federal Reserve announced an interest rate hike for the first time since 2006
The UK's bluechip index followed Asian shares, which closed higher after the announcement, with the Nikkei rising 1.6 per cent and the Hang Seng ending 0.8 per cent higher.
In the US, stocks reacted in a similarly sanguine fashion to the news, with the Dow Jones finishing 1.3 per cent higher and the S&P 500 rising 1.5 per cent.
The highly-anticipated move, to hike rates by 0.25 percentage points, was widely welcomed by analysts.
"The market reaction suggests relief on two counts," said David Morrison, senior market strategist at SpreadCo.
"Firstly, that the Fed didn’t flunk it and duck tightening monetary policy. The second is that the Fed is telling the markets that it is upbeat about the outlook for the US economy, and also confident that its two per cent inflation target will soon be achieved."
At a press conference last night Fed chief Janet Yellen said the decision to hike rates was unanimous among the 12 rate-setters on the Federal Open Markets Committee (FOMC).
However, Yellen was cautious about the outlook for the future.
“The recovery has come a long way but is not yet complete… even after this increase, the Federal Reserve is likely to proceed gradually.”