THE FTSE 100 Index surged to its highest close yesterday for more than 12 years as free-spending central banks continue to send investors flocking to shares.

The London market closed up 32.6 points at 6755.6, a 0.5 per cent gain and its highest finish since September 2000 when the dotcom boom was in full swing.

Stimulus drives by central banks – including major money-printing exercises by the Bank of England, the US Federal Reserve and the Bank of Japan – have cut the price of government debt and sent equities rocketing.

The London market shook off losses in the heavily-weighted mining sector. Royal Bank of Scotland led the charge, gaining 4.5 per cent or 15.1p to close at 351.9p, on the back of an upgrade by Numis Securities.

However, investor pessimism over the outlook for gold was reflected in a number of share prices, with Fresnillo down 35p to 1034p and Randgold Resources down 61p to 4696p.

FTSE 100 newcomer easyJet was near the top of the risers board as investors took encouragement from the performance of Ryanair in the face of tough economic conditions. The Dublin-based rival reported a 13 per cent rise in post-tax profits and said it expected further growth in the current year.

EasyJet shares, which have already risen by more than 50 per cent this year, were up by 47p to 1235p.

Other risers included United Utilities after an upgrade of the sector by Goldman Sachs and recent excitement surrounding the overseas bid interest in rival Severn Trent. Shares were 19.5p higher at 784.5p while South West Water owner Pennon cheered 20p to 719.5p in the FTSE 250.

Shares in rail and bus operator FirstGroup fell by more than 30 per cent after it announced plans to raise £615m from shareholders in a rights issue. Shares closed down 68.2p at 155.6p.