London rises to celebrate US decision

Global markets got exactly what they wanted from the US Federal Reserve on Tuesday evening - 25 basis points on interest rates and a neutral bias to monetary policy - and London celebrated in good style.

The benchmark FTSE index, the 100, moved to the brink of the 6,400 level while there were strong gains in the mid and small-cap indices - especially the latter, which came to within three points of its intraday and closing records. Dealers in London stocks applauded the Fed's moves, pointing out that to have done nothing would have alarmed the market, which was getting increasingly concerned about the potential build-up of inflationary pressures in the US. Equally, a 50 basis points move would have been viewed as too heavy-handed. The FTSE 100 index, although finishing well off the day's best levels, was nevertheless always in good heart, closing a net 54.4 up at 6,369.5. At its best, in mid-morning and boosted by a flurry of institutional buying interest, it hit 6,399.6, only to run into pockets of profit-taking and general selling, eventually closing a net 54.4 firmer at 6,369.5. The FTSE's mid-cap representative, the 250 index, which has proved sluggish in recent sessions, sprang back to life.