City rises as miners and US Fed rumours lift sentiment

The Footsie closed 85.76 points ahead at 5747.35, close to its highest level this year in April, while the Dow Jones Industrial Average advanced 1 per cent.

The minutes of the most recent US Federal Reserve meeting gave encouragement to investors, adding to expectations that policymakers could make fresh moves to safeguard the American economic recovery.

Markets on both sides of the Atlantic were also helped on by strong quarterly results from JP Morgan and chipmaker Intel.

Figures from Intel on Tuesday night set the tone for the session after it beat forecasts on both income and revenue and allayed fears that the personal computer sector would struggle during the second half of the year.

Spirits were further boosted by a 23 per cent rise in third quarter profits at JP Morgan as the Wall Street banking giant reported a decline in bad debts.

Talk surrounding further quantitative easing in the US weakened the dollar, and saw the pound move up against the greenback at 1.58. Sterling was down against the euro at 1.13.

The London banking sector was shaken earlier in the session after Standard Chartered surprised the market by launching a 3.3bn investor cash-call.

The London-listed group wants to ensure it is well prepared for incoming Basel III rules, which will force banks to more than double the spare cash they hold to prevent a repeat of the financial crisis.

Standard Chartered dropped 2 per cent, or 321/2p to 1876p, while speculation that other banks will have to follow suit meant Barclays dropped 23/4p to 292p, although this turned out to be an improvement on earlier in the session.

Expectations for further asset-buying by the Fed put the US dollar under some pressure and sent gold close to recent record highs, at just over 1,360 US dollars an ounce.

Silver producer Fresnillo was one of the mining sector's strongest risers after a gain of 41p to 1282p as its third quarter trading update revealed silver production at a record level.

Fashion house Burberry was lower despite forecasting that full-year profits will be in the top half of City expectations.

The company said it continued to trade well, but analysts noted that sales growth was slightly lower in the second quarter compared with the first.

The company, which took centre stage at the recent London Fashion Week, said it continued to build momentum with strong performances in markets including Hong Kong, the UK, Italy and France, but it was still top of the fallers' board after shares dropped 31p to 1008p.

Pub group Punch Taverns extended losses in the second tier, down another 4 per cent, or 31/8p to 767/8p, in the wake of an 11 per cent plunge seen on Tuesday after its comments on trading prospects spooked investors.

Engineer Bodycote was enjoying a better session thanks to news its annual profits will come in towards the upper end of analyst forecasts. Shares rose 9 per cent, or 25p to 301p.

The biggest Footsie risers were Vedanta Resources up 131p to 2347p, Anglo American ahead 1471/2p to 2884p, Man Group up 121/4p to 269p and Wolseley ahead 73p to 1630p.

The biggest Footsie fallers were Burberry, Smith & Nephew off 14p to 555p, Standard Chartered down and Scottish & Southern Energy, which finished the session off 17p at 1119p.