FTSE hits 21-month closing high

Stronger commodity and banking stocks drove Britain's top share index to its highest close in 21 months yesterday, as investors welcomed the Federal Reserve's pledge to hold down US interest rates and metals prices rose.

The FTSE 100 ended up 24.20 points, or 0.4 per cent, at 5,644.63, its highest close since late June 2008, after the Fed held US benchmark rates near zero and maintained its pledge to keep them low for an extended period.

The index, which has jumped 63 per cent since hitting a low in March 2009, is forecast to make further gains this year, benefiting from a recovery in the global economy, as its international exposure shields it from the grim domestic economic outlook, a Reuters poll found.

"The (Fed) did two things which has helped the markets. One is that it left interest rates on hold... but the other very positive point is that it's beginning to talk up the economy now," said Mike Lenhoff, chief strategist at Brewin Dolphin.

Miners added the most points to the index against a backdrop of buoyant metals prices as the dollar softened and market sentiment improved after the Fed comments.

Fresnillo, Kazakhmys and Vedanta Resources added 1.8 to 3.4 per cent. Rio Tinto climbed 1.8 per cent. China's top state-owned nonferrous metals company Chinalco confirmed it is in talks with Rio Tinto about potential joint ventures in Mongolia and Guinea, a Chinese newspaper said yesterday.