* FTSE 100 up 0.8 pct, led higher by Rolls-Royce
* Rolls Royce up around 6 pct after share buy-back programme
* World stock markets also buoyed by update from Fed
By Sudip Kar-Gupta
LONDON, June 19 Britain's benchmark equity index
rallied on Thursday, helped by a surge in aircraft engines maker
Rolls-Royce and by the U.S. Federal Reserve which
reassured investors over future monetary policy.
The London market tracked gains overnight in U.S. and Asian
equity markets, after the U.S. Federal Reserve said the U.S.
economy was making progress.
The Fed also hinted at a slightly faster pace of
interest-rate increases starting next year, but suggested rates
in the long run would be lower than previously
Britain's blue-chip FTSE 100 index was up by 0.8
percent, or 54.21 points, at 6,832.77 points by the middle of
the trading day.
Rolls-Royce rose by 5.6 percent to 1,067 pence to add the
most points to the FTSE 100, as analysts and investors welcomed
the company's 1 billion pound ($1.69 billion) share buy-back
"There's a lot of support for Rolls-Royce coming in around
the 10 pound level, and the buy-back will add more demand for
the stock," Dafydd Davies, senior trader at London-based Prime
Wealth Group, said.
Some traders remained cautious on the near-term prospects
for the FTSE 100, which has not yet hit record highs, unlike the
U.S. S&P 500 index and Germany's DAX.
The FTSE 100 is up by 1.1 percent since the start of 2014,
lagging gains of 5 percent on the DAX and 6 percent on the S&P.
Some traders are looking to see if the FTSE 100 can get past
its previous failures to break the 6,900 point level before
betting on the FTSE then hitting record highs of 7,000 points.
"The biggest concern for me is that the FTSE has been
lagging other indices so far," Strand Capital managing director
Kyri Kangellaris, said.
($1 = 0.5904 British Pounds)
(Additional reporting by Sarah Young; Editing by Hugh Lawson
and Jane Merriman)