LONDON’S blue chip share index steamed 1.4 per cent ahead yesterday, thanks to a boost from cheery news on the world’s biggest economy.

Better-than-expected service sector survey data in the US sent stocks surging worldwide, adding to investor optimism after moves by the central bank of Japan to weaken the yen.

The FTSE 100 Index closed 79.8 points higher at 5635.8 after a late session spurt sparked by hefty gains on the Dow Jones Industrial Average.

A trade group report revealed that the powerhouse US services sector saw growth pick-up last month, thanks to stronger demand, helping allay recovery fears.

Stocks globally had already been put on the front foot after Japan’s decision to cut its key interest rate even closer to zero and relaunch money boosting efforts.

The UK also had some good news on the service sector after the latest Markit/CIPS study showed higher growth against expectations for a fall.

Better economic news helped the pound rise 0.7 per cent to 1.59 US dollars, although it eased back against the euro after gains yesterday.

In corporate news, there were encouraging figures from Tesco and Thomson Holidays owner TUI Travel.

Tesco edged up 0.9p to 431.3p after it reported a slight improvement in UK like-for-like sales and said it was benefiting from the “tailwinds of recovery”.

Half-year pre-tax profits lifted 12 per cent to £1.6bn.

Most analysts said the update allayed fears about difficult trading conditions, although Evolution Securities said the underlying trends were “not quite so rosy”.

Sainsbury’s, which is due to issue a trading statement today, gave back early session gains to stand 0.3p higher at 389.6p.