Britain's leading share index closed up 1.2 percent on Wednesday as heavyweight miners and banks were buoyed by better U.S. economic data, offsetting weaker food retailers and producers.

The FTSE 100 index rose 49.96 points to 4,279.98 after an unexpected jump in U.S. durable goods orders last month, which eclipsed a fall in sales of new U.S. family homes in May.

The index has gained more than 23 percent since hitting a six-year low in March, but is still down 3.5 percent on the year.

"We've been dragged higher by the U.S. following decent durable goods orders," said Angus Campbell, head of sales at Capital Spreads.

"The test of the market will be to see if we can sustain a rally like this or whether this presents an opportunity for the bears."

New orders for long-lasting U.S. manufactured goods rose by a much stronger than expected 1.8 percent in May, but the annual sales pace of new U.S. single family homes was 342,000 a 0.6 percent decline from April.

Heavyweight miners drove the FTSE 100 higher by the close, with firmer metal prices on the back of a weakening dollar reviving interest in the sector.

Anglo American remained the top riser, up more than 10 percent as takeover speculation continued to fuel interest in the stock, after Xstrata put more pressure on the takeover target to come to the negotiating table.

"Speculation about corporate activity in the mining sector has been good for the market and adds a little extra to the price," said Mike Lenhoff, chief strategist and head of research at Brewin Dolphin Securities.

Among the other miners, Kazakmys, Eurasian Natural Resources , Vedanta Resources, Rio Tinto and Xstrata gained between 3.1 and 6.9 percent.

Banks, the index's second weightiest sector, found favour after recent falls, with traders waiting on rate-setting news from the U.S. Federal Reserve later in the day.

Barclays, Standard Chartered, Lloyds Banking Group, Royal Bank of Scotland and HSBC gained between 1 and 5.3 percent.

The Fed is widely expected to keep interest rates on hold at a record low and maintain its planned debt purchases, so the focus will be on whether the bank tweaks its statements to reign in the slide in U.S. Treasuries that threatens the economy's budding recovery.

Oil majors reversed early losses as crude moved back above $69 a barrel. BP and BG Group were up 0.4 and 0.3 percent respectively.

FOOD FOR THOUGHT

Food retailers and producers suffered, with Tesco, Sainsbury , Wm. Morrison and Unilever losing between 0.4 and 1.8 percent.

British retail sales fell in June at the same pace as in May, though orders placed with suppliers picked up, a survey by the Confederation of British Industry showed on Wednesday.

The CBI's distributive trades survey sales balance remained unchanged in June at May's level of -17, in line with the average of analysts' forecasts.

GlaxoSmithKline was also lower, down 0.5 percent. The drugmaker announced late on Tuesday that the U.S. Food and Drug Administration had said it would not approve its experimental nausea drug Rezonic for cancer or surgical patients.

Man Group, the world's largest listed hedge fund manager, topped the FTSE fallers, shedding 4.1 percent on news Morgan Stanley was placing 12 million shares in a range of 267-272 pence.

Friends Provident and Experian both fell 3 percent after trading ex-dividend.