Global markets boosted by Fed move
Global stock markets rallied sharply higher after the US Federal Reserve's shock decision to maintain its massive programme of stimulus for the world's biggest economy.
London's FTSE 100 Index jumped 1.4% after surging more than 90 points in early trading, mirroring similar gains across Europe and Asia.
Traders had been fretting all summer about the prospect of US central bankers tapering their quantitative easing programme, which has been pumping 85 billion US dollars (£53 billion) a month into America's economy.
Worries over an end to the monetary support that has eased America through the financial crisis had weighed on shares on both sides of the Atlantic, with market jitters spurred by any clue on the Fed's likely action.
Markets had widely expected the Fed to begin tapering QE with a 10 billion US dollars (£6.3 billion) reduction in monthly asset purchases, but were left stunned by t he announcement that officials believe the US is not yet ready to be weaned off the support.
The decision, which came after the close of the London market last night, propelled the Dow Jones Industrial Average on Wall Street to a record high as well as driving big gains in Asian shares overnight.
European shares joined the worldwide surge, with Germany's Dax and France's Cac 40 up by more than 1%.
In London, blue chip mining groups and financial stocks were leading the charge, with only a handful of firms seeing share falls.
Meanwhile the dollar was weakened by the prospect of more money flooding into the economy, resulting in the pound reaching a nine-month high of 1.61 US dollars.
But while the markets may have been cheered, the Fed's announcement was a sign of continuing worries about the health of the US economy.
The central bank said that although it continued to recover, unemployment remained high and interest rates on mortgages have been rising.
It concluded a two-day monetary policy meeting by saying it wanted "more evidence" on growth, and insisted its asset purchases were "not on a preset course".
Chairman Ben Bernanke said: "Conditions in the job market today are still far from what all of us would like to see."
The Fed lowered its economic growth forecasts for this year and next year slightly, predicting the US will expand 2% to 2.3% this year, down from its previous expectation of 2.3% to 2.6% growth.
Jeremy Cook, chief economist at World First foreign exchange, said its surprise hesitancy suggested "all is not well in the United States".
The surge in markets is good for investors, including pension funds, but shows the divorce between the currents driving financial trading floors and the concerns affecting the wider world.
Niall King, premium client manager at CMC Markets, said: "Global equity market lust for cheap money continues to take precedence to the traditional values of economic health."