Markets Update: FTSE hits 2-year peak after Fed stimulus move

The US Federal Reserve's action to stimulate the flagging American economy has sent the FTSE to highest level for two years and boosted the pound to a high against the dollar.

All eyes are now on the Bank of England, although little change is expected in either interest rates or further quantative easing.

By 10am the FTSE 100 index was up 96 points at 5,845 with mining shares among the best performers behind the weaker dollar.

The Mid-250 index was trading 116 points higher at 10,992.

BHP Billiton, thwarted by the Canadian government in its bid for Potash Corp, advanced 121p to £24.

Elsewhere Man Group at 275p and Unilever £19.05 topped the list of major rises with gains of 21p and 98p in the wake of upbeat trading statements.

Favourable news also benefited Old Mutual at 134p, up 5p, while British Airways flew up a further 11p to 285p as the Christmas strike threat receded following backing by the court.

Airbus A380 engine problems unsettled Rolls-Royce, 20p lower at 635p and sluggish sales figures weighed on William Morrison, 6.5p lower at 263.5p.

A Credit Suisse rating downgrade contributed to a 6p fall in Bunzl to 735p and the soaring cost of clothing trimmed another 4p from Marks & Spencer at 415p.

Kenmare Resources improved 1.6p to 22.6p as Bank of America initiated coverage with a buy recommendation and 30p target.

A rebound in house prices brightened housebuilders where Taylor Wimpey added 1.6p to 25p and Barratt Developments 3.7p to 81.35p.

Positive statements underpinned Centamin Egypt at 172p, Tate & Lyle 514p, Millennium & Copthorne 560.5p, Spirent Communications 151p, Melrose Reosurces 272p, Shanks 112p and Rathbones 899p, up 6p to 32p, but disappointing news cut 13p from Wolfson Microelectronics.