FTSE outperforms Europe as weaker dollar lifts commodities companies

UK shares edged higher on Thursday, outperforming their European counterparts, as miners were boosted by a weaker dollar after the US Federal Reserve's dovish decision to hold interest rates steady. The Fed also indicated on Wednesday that moderate US economic growth and "strong job gains" would allow it to tighten policy this year, noting however that the US continues to face risks from an uncertain global economy.
The dollar fell against sterling and the euro after the statement, crimping appetite for British and euro zone shares as exporters were hit and equities became more expensive to dollar investors.
However, the fall in the dollar pushed shares in British commodities stocks higher as dollar-priced crude oil and metals became cheaper for holders of other currencies.
The FTSE 100 index rose 25.63 points, or 0.3 percent to 6,201.12 points by the close, outperforming steeper falls in euro zone shares.
"A more dovish Fed could be a problem for the shares of Eurozone countries since it unwinds some of the export advantage that came about because of accommodative ECB policies," Jasper Lawler, market analyst at CMC Markets, said in a note. "UK stocks are outperforming those in Europe thanks to a gain in resource shares which have benefited from a rally in dollar-denominated commodities following the Fed meeting."
Miners were the top sectoral gainers on the blue-chip index, with the FTSE 350 Mining index jumping 7.5 percent as the price of copper rallied to a four-month high.
Anglo American, Glencore, Antofagasta, BHP Billiton and Rio Tinto all rallied between 5.4 percent and 9.8 percent.
The oil and gas sector also rose, tracking the price of oil, which extended its strong gains after the world's biggest suppliers firmed up plans to meet to discuss an output freeze.
Shares in British American Tobacco and Hammerson fell and were among the stocks which went ex-dividend. Ex-dividend shares took around 8 points off the FTSE 100.
The index was unmoved by the Bank of England's decision to keep rates steady, with policymakers adding that sterling had been dealt a big hit by uncertainty in the run-up to the referendum on EU membership.