London stocks index hits record highs

London's benchmark FTSE 100 index hit its highest levels on record Tuesday, beating previous peaks reached in December 1999 during the Internet boom.

The FTSE 100 hit a record at 6,958.89 points nearing the end of the day's trade and after the eurozone had backed a four-month extension to Greece's financial lifeline.

It went on to reach a record close at 6,949.63 points after rising 0.54 percent compared with Monday's finish.

"After 15 years of market ups and downs since the peak of the dotcom boom, the FTSE 100 did it, a new all-time high," said Jasper Lawler, analyst at traders CMC Markets UK.

The index has been rising steadily for months, helped by central bank stimulus and improvements to the British and US economies that have offset weakness in China and eurozone strains.

Indices on Wall Street have already struck record-highs this year.

A recovery to commodity prices has meanwhile boosted share prices in heavyweight mining companies traded on the FTSE index of 100 companies.

The index includes companies ranging from energy giants BP and Shell to banks HSBC and Barclays as well as miner Rio Tinto, mobile phone group Vodafone, British Airways-parent IAG and pharmaceutical firm GlaxoSmithKline.

"The current level of the FTSE is underpinned by company profits to a much greater extent than it was in 1999," said Laith Khalaf, senior analyst at Hargreaves Lansdown stockbrokers.

"The economic backdrop is also encouraging for UK companies, with low interest rates, low inflation, and growth forecasts rising.

"However, risks still lurk in the background. The agreement reached in Europe (over Greece) is a sticking plaster to allow further negotiations to take place and may well flare up again. The UK election (in May) will also cause some thrills and spills, as markets weigh up the implications of potential outcomes."

- British praise -

The OECD group of leading economies on Tuesday approved Britain's running of the economy in a boost for Prime Minister David Cameron as elections loom, though it warned about growing inequality.

Angel Gurria, head of the Organisation for Economic Cooperation and Development (OECD), said the British economy expanded by 2.6 percent in 2014 and "the building blocks have been placed to have a long-term growth".

He also praised the development of the labour market, where the unemployment rate has fallen to 5.7 percent.

Speaking at a press conference with British finance minister George Osborne, Gurria congratulated him on halving Britain's budget deficit but warned it was "still high in comparison to other OECD countries".

- Greece gains time -

In Athens, the finance ministry said Greece has gained a "few weeks" breathing space.

Eurozone finance ministers said that reform proposals submitted by Greece's one-month-old left-wing government were "sufficiently comprehensive to be a valid starting point" for further discussions.

A four-month extension of emergency support now has to be approved by several national parliaments.

Britain, though not a member of the eurozone, is among the bloc's main trading partners.

Market focus Tuesday was also on the United States as Federal Reserve Chair Janet Yellen said the US labour market still showed cyclical weakness and inflation continued to fall, making any interest rate hike unlikely before June.

In testimony in Congress, Yellen also said that frailties in China and Europe continued to pose a risk for the US economy, supporting the need for keeping the extraordinarily loose monetary policy currently in place.

But she said that generally the US economy continued to grow fast enough to bring down unemployment, and the Fed expected that inflation would return back to normal over the medium term.

That leaves the Fed still on course to begin normalising monetary policy later this year after keeping its base interest rate at the zero level for more than six years.