The index ended the day at 5,154.64, a rise of 45.74 points.

Fashion house Burberry was among the leading shares benefiting from positive noises coming from brokers over demand for luxury goods.

The firm ended the day up 5.55 per cent – topping the commodity stocks.

Tullow Oil rose 5.04 per cent, Kazakhmys gained 4.92 per cent, Antofagasta rose 4.64 per cent and Eurasian Natural Resources climbed 4.55 per cent.

Meanwhile, financial stocks took a hit today.

BAE Systems fell 2.64 per cent and Shire was down 2.11 per cent.

Segro fell 2.06 per cent and Vodafone dipped 1.75 per cent.

David Jones, chief market strategist at IG Index, said: "Once again the mining sector has dragged the market higher with numbers from Vedanta showing production was at maximum capacity over recent months.

"The Bank of England kept rates on hold, so no surprise there – but markets are less than clear as to which way quantitative easing may be headed in the months to come.

"With some members of the Monetary Policy Committee concerned that the most recent economic strength could just be something of a “dead cat bounce”, the Bank may still feel they need to give the UK a boost."

In New York, the Dow Joes was up 0.97 per cent to 9,819.59 at 11:53 EDT (16:53 BST), while the S&P 500 in Chicago gained 1.07 per cent.

Of the Royal Mail staff who balloted, 76 per cent of staff said yes to strike action.

The news follows a series of regional strikes which have caused a backlog of millions of letters.

Postal workers voted three to one in favour of action, with more than 60,000 out of 80,000 workers voting to strike.

Commenting on the vote, CWU deputy general secretary, said: "If we don’t take a stand now then you will see postal services in the UK destroyed forever.

"We are calling on the government to take decisive action. What we want to see is that this company moves forward.

"We will be working hard to resolve this before a national strike takes place.

"There is a window of opportunity for the employer. We are urging for them to meet with us before a national strike takes place."

Exit polls earlier showed as many as 70 per cent of postal workers have backed the union’s call for a strike in their dispute over pay and work practices. The strike could start as early as next week and last for several days.

Royal Mail’s operations director, Paul Tolhurst, told the BBC that the Royal Mail wanted to keep talking to the CWU: "The union is constantly demanding that we halt the changes we are making. But we have completed our changes for this year, so there is a clear opportunity for the union to stop striking."

But the CWU general secretary Billy Hayes has said change is necessary.

"It has come to this because of the management of Royal Mail’s and the government’s refusal to engage the workforce on modernising the company," he said.

Recent strikes has meant thousands could face penalty charges for late bill payments, and the backlog is so bad the Christmas post could be effected.

The union has to give Royal Mail seven days’ notice of any strike, meaning industrial action could start next Thursday.

Grant, 54, returns to Fratton Park two years after leaving for Premier League rivals Chelsea to take up a similar position.

The Israeli coach will work alongside current Blues manager Paul Hart, who will maintain day-to-day control over team affairs including selection policy.

Pompey chief executive Peter Storrie said: "The club’s new owners want to appoint, with immediate effect, Avram Grant as director of football.

"Paul Hart remains as manager and Avram Grant will work alongside him and give him the benefit of his experience. Avram’s role is to help and advise Paul. Team selection matters will remain with the manager."

Storrie welcomed the appointment, saying the arrival of a second "very experienced" individual to join Hart in the team’s coaching hierarchy "will only benefit the club".

"Paul does not have an assistant but now has a director of football alongside him," he continued.

"The manager, director of football, chief executive officer and chief scout will all work together on the buying and selling of players."

Portsmouth goalkeeper David James, who is currently on duty with the England national side, welcomed the move.

He said: "I love Avram.

"When I first joined the club he was very active in the preparation for games.

"His football knowledge is extensive and on top of that he’s a very nice bloke. In my view it’s a good move."

Grant was sacked by Chelsea 18 months ago, despite taking over as head coach in difficult circumstances following the acrimonious departure of Jose Mourinho.

The former Israel national team coach led the Londoners to runners-up spot in the Premier League, as well as the finals of the League Cup and the Champions League.

However, he was sacked just six months into a four-year contract after failing to delivery any silverware.

The contract for Jones, who has had several surgical procedures on his knee since injuring it playing for England in the 2005 Ashes series, includes several pay as you play clauses due to concerns over his long-term fitness.

There were fears Jones may have to retire after Worcestershire decided not to renew his contract at the end of the 2009 season following another injury-interrupted campaign.

However, Jones believes the move to the Rose Bowl could resurrect his ailing career.

He said: "I am delighted to have signed for Hampshire. I feel that the Rose Bowl is a venue and a club where I can re-ignite my cricketing ambitions and at the same time bring home some silverware and success to such a forward-thinking club.

"I look forward to meeting all the guys and hopefully adding to the superb talent that is already here."

Hampshire chairman Rod Bransgrove said he is "delighted to have added Simon Jones to our battery of seam bowlers".

"I have been a great fan of Simon since the Ashes victory in 2005 and we all know what a match winner he can be when fully fit," he added.

Meanwhile Hampshire first-team manager Giles White commented: "Obviously we are very excited to have signed Simon.

"He knows he has a hard winter ahead in terms of rehab to get his career back on track but, he is a proven performer at both domestic and international level and I’m sure he will prove to be a great signing for the club."

At 08:48 BST the index stood at 5,159.83 – a gain of 50.93 points or 1.00 per cent.

Leading the gains was Vedanta Resources rose 5.42 per cent after production reports showed the miner recorded higher iron ore and zinc output.

Lonmin rose 3.77 per cent, Antofagasta climbed 3.76 per cent, Kazakhmys gained 3.64 per cent and Anglo American was up 3.50 per cent on the news.

The biggest drop was recorded by Shire – down 0.86 per cent – after UBS cut its rating on the pharmaceutical group yesterday to neutral from buy.

Thomas Cook was down 0.26 per cent, Reed Elsevier fell 0.21 per cent and Smith & Nephew dropped 0.19 per cent as losses were limited in early trading.

Last night in the US, trading was muted, with the Dow down 0.06 per cent and the S&P 500 up 0.32 per cent.

Overnight in Asia, the Nikkei gained 0.34 per cent and the Hang Seng rose 1.08 per cent.

In Europe the morning, the Dax gained 1.29 per cent and the Cac40 rose 1.40 per cent.

The Bank’s Monetary Policy Committee (MPC) will announce its monthly decision on interest rates as well as providing an update on its quantitative easing programme later today.

David Kern, chief economist at the British Chambers of Commerce (BCC), said the programme of pumping money back into the economy should be increased from its £175 billion limit to £200 billion.

He said: "Despite some positive signs that the UK recession may be ending, the very disappointing recent decline in manufacturing output provides a stark reminder that recovery is not guaranteed.

"Large-scale job losses and the persistent weakness in lending to companies remain serious problems that must be resolved. Recent figures show that annual growth in lending to non-financial companies remains negative, and the pace of decline continues to worsen.

"To counter the threat of a relapse, we urge the MPC to increase the quantitative easing stimulus to at least £200 billion, and to consider a lower – or even negative – interest rate on deposits held by commercial banks at the Bank of England. This would penalise banks hoarding cash, and provide an incentive to lend to viable, credit-worthy customers."

Interest rates currently stand at 0.5 per cent, a 300-year low, with experts claiming it may stay at the same level into 2010.

The monetary policy committee (MPC) also held its quantitative easing programme limit at £175 billion.

Some financial analysts had called for the programme to be increased to £200 billion.

David Kern, chief economist at the British Chambers of Commerce (BCC) earlier warned: "Despite some positive signs that the UK recession may be ending, the very disappointing recent decline in manufacturing output provides a stark reminder that recovery is not guaranteed.

"Large-scale job losses and the persistent weakness in lending to companies remain serious problems that must be resolved. Recent figures show that annual growth in lending to non-financial companies remains negative, and the pace of decline continues to worsen.

"To counter the threat of a relapse, we urge the MPC to increase the quantitative easing stimulus to at least £200 billion, and to consider a lower – or even negative – interest rate on deposits held by commercial banks at the Bank of England. This would penalise banks hoarding cash, and provide an incentive to lend to viable, credit-worthy customers."

Interest rates have been held at 0.5 per cent, a 300-year low, for a number of months now, with experts claiming it may stay at the same level into 2010.

Neil Young, CEO of Young Group, said today’s announcement did not come as a surprise.

"[The] base rate is unlikely to change until the Bank of England’s quantitative easing policy has ceased and, as expected, the monetary policy committee has delayed making any decision regarding changes to its programme until after next month’s quarterly inflation report."

Guardsman Jamie Janes, of 1st Battalion The Grenadier Guards, was on foot patrol near to Nad Ali District Centre in central Helmand province when he was killed in the blast on Monday morning.

Three of his colleagues were also wounded in the blast which was followed by an insurgent ambush.

Guardsman Janes died en route to hospital following the conclusion of fighting.

Lieutenant Colonel Roly Walker, commanding officer of the Grenadier Guards Battle Group, paid tribute to Guardsman Janes in a statement released by the MoD.

He said: "Jamie was a soldier to his heart, and a friend to all. He knew the dangers he would face in Afghanistan but he had the courage to keep soldiering.

"He stood tall amongst his fellow men as an experienced hand who willingly stepped forward to take on the difficult task of clearing routes, and he gave the less experienced soldiers in his section huge confidence.

"He leaves behind a strong impression and his memory will inspire us. I am hugely proud of him, and humbled by his sacrifice."

Defence secretary Bob Ainsworth added: "I was very sorry to learn of the death of Guardsman Jamie Janes, a soldier who I’m told had given exemplary service since joining the Army at 16 and had a promising career ahead of him.

"He had already shown his bravery, professionalism and dependability on a previous tour of Afghanistan and was an integral part of his company. He also clearly cared deeply about his family and my thoughts are with them at this very sad time."

Since operation began in Afghanistan eight years ago, 220 British service personnel have been killed.

However Financial Fraud Action UK urged consumers to still be careful with their cards, warning that despite losses for mail, internet and phone payments falling, internet banking fraud was up 55 per cent on last year.

Experts have said fraudsters may have turned to targeting foreign-issued cards.

Katy Worobec, head of fraud control, said: "Although it’s difficult to prove, we think that one of the reasons for this dip in card losses may simply be as a result of fraudsters realising that they can prosper more by targeting foreign-issued cards – particularly those without chip and PIN protection and which currently have stronger currencies than sterling.

"The fact that we’ve seen a 36 per cent increase in the first half of this year in the amount of fraud being committed on foreign issued cards here in the UK adds some weight to this theory."

Financial Fraud Action said there was the first ever fall in card-not-present fraud losses in the first half of this year, with cheque fraud losses down 26 per cent.

The industry body said: "The fraud to turnover rate on debit and credit cards amounted to 0.1 per cent in the first half of the year – reflecting the fact that only around a tenth of a penny is lost to fraud in every £1 spent on cards."

It added that Chip and PIN had undoubtedly continued to make it difficult for fraudsters to commit fraud, and the increasing use of sophisticated fraud screening detection tools by retailers and banks, as well as the continuing growth in the use of MasterCard SecureCode and Verified by Visa, was also having an effect.

Rumina Hassam, personal finance expert at uSwitch.com, commented: "Today’s figures, which indicate an overall drop in card fraud, are great news for both the industry and consumers. However, card ID theft has actually increased by 23 per cent which means consumers should do everything they can to protect themselves and make sure they do not play into the hands of criminals.

"The most effective way of monitoring the status of credit card accounts is to keep a close eye on credit reports."

Shadow culture secretary Jeremy Hunt told the Tory conference his party was backing proposals put forward by Dame Kelly Holmes.

The schools Olympics would be a national sports competition involving schools across the UK, culminating in a finals session at the Olympic Stadium in London. The Tories said reforms to the National Lottery funding system would pay for the new competitions.

Mr Hunt said publishing league tables of not just sporting facilities but also results, through a system of local, city, regional and national heats, would foster a spirit of competitive sport to preserve the legacy of London 2012 and also help combat childhood obesity.

He told delegates in Manchester the plans would create a "genuine legacy" long after the Games finished.

"We agree that the values of competitive sport are crucial in creating a society that brings out the best in young people. This initiative will allow us to use 2012 to bring competitive sport – and sporting values – within the grasp of all young people," he said.

"Labour claims to support school sport but their obsession with political correctness, their continual raids on National Lottery sports funding and their suffocating health and safety regulations mean there are millions of children not taking part in any competitive sport."