Alan Greenspan, chairman of the US Federal Reserve, was the toast of London's equity market yesterday, as share prices rocketed in response to the Fed's move to lift US interest rates by the expected 25 basis points.

Although the Fed's move was exactly as expected by most market observers, there was genuine relief around trading desks that the Fed had not gone a stage further to increase rates by 50 basis points.

And there had also been very real fears, too, that a warning of further increases in US rates might have been included in the package.

All those worries disappeared like London's fleeting sunshine yesterday as the stock market greeted Wall Street's overnight upsurge, with the FTSE 100 eventually closing a net 170.4, or 2.7 per cent, up at 6,488.9.

Although some market observers described that performance as "a knee-jerk reaction, no more than a reflection of the market's relief that the Fed made no reference to the probability of further increases," others said they expected London to make further progress in the short term.