Markets rally on tapering delay
European stock markets rallied in the wake of the United States Federal Reserve's shock decision to maintain the size of its huge economic stimulus programme.
London's FTSE 100 Index climbed 1%, up 66.6 points at 6625.4, after Fed chairman Ben Bernanke stunned markets by revealing it will continue pumping 85 billion US dollars (£53 billion) a month into the world's biggest economy.
European markets also advanced, with Germany's Dax and the Cac 40 in Paris making gains after t he Fed said America is not yet ready to be weaned off its money-printing drive.
Markets had widely been expecting the central bank to begin tapering quantitative easing with a 10 billion US dollars (£6.3 billion) reduction in monthly asset purchases, and shares rose as traders reacted to more money washing around the global economy.
The vast money-printing drive aims to boost the value of assets, lower the cost of borrowing and encourage businesses and households to spend.
But after recording strong overnight gains immediately after the announcement, the Dow Jones Industrial Average retreated in early trade as Wall Street re-opened.
The pound also retreated from a new nine-month high, to fall to 1.60 US dollars, and was also down strongly against the euro to 1.19.
An unexpected fall in UK retail sales last month - down 0.9% between July and August - dampened enthusiasm for sterling.
The Office for National Statistics said the main decline came in the food sector, where sales fell 2.7%, reversing a 2.7% gain seen in July that was spurred on by the heatwave.
Overall, sales volumes were still up 2.1% year-on-year.
Miners and financial stocks led the FTSE 100 charge, with Randgold Resources and Aberdeen Asset Management at the top of the risers board after rising 363p to 4841p and 23.5p to 390.8p respectively.
In corporate news, online fashion retailer ASOS pleased investors by saying full-year profits were set to "marginally" beat forecasts after notching up a 47% sales hike in its final quarter.
Shares jumped 13%, or 636p to 5469p.
Cash-and-carry chain Booker was also enjoying a share surge - up 3p to 136.6p - as it said interim sales rose 2.3% after its wholesale customers were given a boost by the warmer summer weather.
The group added that its recently acquired Makro business was showing progress on its turnaround, with improved sales declines.
Fellow second tier stock Premier Farnell fell 0.6p to 228.1p despite the electronic components distributor reporting a 19.8% rise in interim profits to £38.1 million.
The biggest risers on the FTSE 100 were Randgold Resources up 363p to 4841p, Aberdeen Asset Management up 23.5p to 390.8p, Fresnillo 61p higher to 1069p and Petrofac up 63p to 1412p.
The biggest fallers on the FTSE 100 were Johnson Matthey down 42p to 2852p, easyJet 16p lower to 1294p, G4S 2.5p weaker to 250p and Rexam down 3.9p to 491.6p.