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LONDON (AFP) – London surged higher in morning trade on Tuesday with mining shares boosted by record metals prices, amid hopes of further stimulus measures for the US economy

In late morning deals, the FTSE 100 index rallied 1.02 percent to 5,829.23 points, boosted also by an upbeat trading update from retail giant Tesco.

Commodity markets rallied sharply, with both copper and gold striking record high points, while crude oil traded at the best levels for more than two years.

"The FTSE 100 powered higher ... on the back of a strong performance in the mining and retail sector," said analyst Joshua Raymond at financial spread-betting firm City Index.

"The miners are benefiting from correlated strength in commodity prices, with copper prices rallying in London hitting a record in the process, whilst crude oil prices have also edged higher."

On the London Bullion Market, gold rose to a record pinnacle at 1,428.55 dollars per ounce, dragging sister metal silver to another 30-year high.

And on the London Metal Exchange, copper for delivery in three months soared to an all-time peak 9,014 dollars a tonne.

Equities were also buoyed as traders mulled the chance of the US Federal Reserve launching a fresh round of monetary stimulus if the world's biggest economy remains stuck in the doldrums.

Fed chief Ben Bernanke said in an interview to CBS television broadcast Sunday that "it's certainly possible" that the Fed might inject into the markets more than the 600 billion dollars decided on last month.

In addition, analysts said that a promise by US President Barack Obama to extend tax cuts by two years would also bolster financial markets.

Obama, bowing to his Republican foes in their first major battle since the November election, agreed to extend tax breaks for the wealthiest Americans under a sweeping deal aimed at averting a big 2011 tax hike.

The president yielded in the deal announced late Monday, which extends tax cuts enacted under former president George W. Bush for all income brackets despite his earlier push to exclude top earners.

"Obama's extension of the Bush-era tax credits has the prospect to add some seasonal cheer but the eurozone debt issue continues to linger," said IG Markets analyst Chris Weston.

Later on Tuesday, investors will revisit those concerns, as debt-riddled Ireland unveils its latest austerity budget.

Irish finance minister Brian Lenihan will deliver a 2011 budget that will contain a combined 6.0 billion euros (8.0 billion dollars) of taxation hikes and spending cuts.

The statement will be the first in a series of budgets to implement a total fiscal correction of 15 billion euros over the next four years.

The deal with the EU and the International Monetary Fund for 67.5 billion euros in external loans and guarantees, plus 17.5 billion taken mostly from Ireland's public pension fund, has angered citizens.

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