Falling dollar drives gains for miners after Fed rate pledge

European stocks advanced this afternoon following the US Federal Reserve's interest rate outlook, with miners driving the FTSE 100 to build on earlier gains.

After the Fed pledged to keep interest rates lower for longer, the dollar weakened against the euro, sending metals prices higher.

Kazakhstan-based copper miner Kazakhmys was in the top spot in the FTSE's risers after saying it had met all its major production targets in 2011 and expects to maintain similar levels of copper output in 2012.

Sector peer Anglo American also rose after it said iron ore production in the final quarter of 2011 increased by 5% from a year earlier to 12.4m tonnes.

Vedanta Resources, Xstrata and Rio Tinto were also firmer today.

Meanwhile, Royal Bank of Scotland rose on rumours US investment bank Jefferies is close to buying the bank's corporate broking arm Hoare Govett. Barclays and Lloyds were also making strong gains in afternoon trading.

London's leading index rose 1.38% by mid-afternoon to reach 5,802.

European stock markets also climbed - France's Cac 40 index jumped 1.46% to 3,360 and the German's Dax rose 1.8% to 6,537.

US markets have so far given a muted response to the Federal Reserve's announcement last night it intends to keep interest rates low until 2014.

Central bank chairman Ben Bernanke also signalled plans for a third round of quantitative easing, and took the landmark decision to set an inflation target of 2%, mirroring the policies of other central banks.

The Dow Jones edged up 0.33% to 12,800, while the S%P 500 gained 0.87% to 1,326.

New orders for US manufactured goods also provided a small boost to the US stock markets, after orders for December rose more than expected, boosted by demand for aircraft and business equipment.

 Additional reporting by ShareCast