Mining stocks led Britain's top share index higher by midday on Thursday, as solid company updates and the promise by the U.S. Federal Reserve to support economic growth fuelled a rally in the sector.

London's blue chip index rose 60.50 points, or 1.1 percent to 5,783.50 by 1134 GMT. The rise followed gains overnight on Wall Street, after the Fed said it would likely keep interest rates lower for longer than expected and leave the door open for further quantitative easing, as global growth threatens to grind to a halt amid the euro zone debt crisis.

Resource stocks naturally rallied as it looked like central bankers in the World's largest economy would be willing to do what it takes boost growth, which is in line with actions from central banks around the globe to boost liquidity in the financial system.

Low inflation, especially if commodity price comparatives continue to ease in 2012, should enable the FOMC to support the economy rather than tighten policy, Gerard Lane, equity strategist at Shore Capital, said.

For the time being, we would suggest risk assets are supported by better than expected US economic data, and the European Central Bank's willingness for balance sheet expansion to stave off the sovereign debt crises.

Miners were sharply higher, in tandem with base and precious metal prices, as investors bet actions by the Fed, which followed U.S. President Barack Obama's proposal on Tuesday to divert money into the country's infrastructure, would help sustain demand.

Gold equities Fresnillo and Randgold rose 2.4 and 3.7 percent respectively, as investors used the stocks as an equity play on the yellow metal, which jumped after the announcement by the Fed weakened the dollar

Lower interest rates and more quantitative easing dilutes further the value of cash and returns from bonds, boosting appetite for equities.

The FTSE 100 yields around 4 percent on dividends, compared with interest rates of 0.5 percent in Britain. UK gilts yield about 2 percent and with inflation around 5 percent, real returns for investors are negative.

Miners also found support after Anglo American, Lonmin, Petropavlovsk and Kazakhmys all reported output figures either in line with or better than expectations.

STOCK PICKING

With the outlook for economic growth precarious at best -- the IMF recently cut global growth forecasts again -- analysts are urging investors to stock pick wisely.

HSBC said earnings risks in the European chemicals sector are on the downside and shares could come under pressure after their recent rally, but for investors looking for exposure in the sector it recommended Johnson Matthey among its top picks.

Johnson Matthey rose 2.6 percent as HSBC also raised its target price on the firm to 2,375 pence from 2,250 pence and kept its overweight stance.

Low-cost carrier easyJet climbed 9 percent after posting a 16.7 percent rise in first-quarter revenue.

Nomura said a combination of more realistic forecast assumptions, attractive valuation and lowering capacity growth plans will help the sector.

British Airways owner International Airlines rose 4.3 percent.

Banks rebounded from Wednesday's falls as the prospect of more support from central banks gave investors confidence the sector, which fell by 30 percent in 2011 on worries over banks' balance sheets and exposure to Europe's debt problems, would be able to avoid meltdown.

But the FTSE 100 stayed within its recent trading range of between 5,600 and 5,700, and volumes were light -- around 30 percent of their 90-day average -- suggesting investors remained to be convinced that equities are the safest place to invest their money.

Equities are reacting because it looks like liquidity's going to be thrown at this market from all directions but that means the situation (economic recovery) is not improving, said David Morrison, market strategist at GFT Global.

Highlighting ongoing concerns, according to Thomson Reuters Starmine data, nearly two-thirds of U.S. companies to have reported so far in the fourth-quarter have missed watered-down expectations.

On the downside, BSkyB was the standout faller, down 1.0 percent, as Barclays Capital downgraded the satellite broadcaster to equalweight from overweight as it sees temporary headwinds that should prevent the stock from outperforming in the coming months.