THE FTSE 100 Index powered more than 1% ahead due to hopes of a deal being struck to avoid America's so-called fiscal cliff.

Investor optimism over a resolution to the US budget crisis sent the FTSE 100 to its highest level for more than three weeks, up 67 points to 5870.3.

President Barack Obama spurred on markets after he said a deal could be reached to avoid automatic tax hikes and spending cuts before Christmas.

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But comments after the London market closed dampened spirits on Wall Street, with House of Representatives Speaker John Boehner saying there had been "no substantive progress" made on talks. This put pressure on the Dow Jones Industrial Average, despite cheer on the US economy due to better-than-expected jobs data and figures showing gross domestic product grew by 2.7% in the third quarter – a revision on the 2% initial estimate.

Sentiment was helped in London by a CBI report revealing improved sales on the high street in November for the third consecutive month in a row.

This helped the pound edge higher to 1.60 US dollars and 1.24 euros, despite earlier falls after weak lending figures and house price data raised the case for more quantitative easing.

Heavily-weighted mining stocks led the FTSE 100 up, with Kazakhmys the biggest riser with a 40.5p increase to 719p.

B&Q owner Kingfisher sank near the bottom of the FTSE 100 after it revealed a worse-than-expected 4% drop in like-for-like sales at the DIY chain.

While the decline was still an improvement on the 6% fall seen in the first half of the year, the third-quarter sales failed to meet City expectations of a 1% dip. Shares were 1.6p lower at 279p. Outside the top flight, Dixons Retail was also under pressure as it unveiled an underlying pre-tax loss of £22.2 million in the 24 weeks to October 13, although this was less than the £25.3m loss seen a year earlier. Shares in the owner of PC World and Currys fell 0.3p to 25.8p as the firm blamed the loss on its French online gadget firm PIXmania after writing down the value of the business.

Technology company Invensys rose another 9% after news of a £1.74 billion proposed deal to sell its rail business to German high speed train maker Siemens. Shares were 25p ahead at 305p.

The biggest FTSE 100 risers were Kazakhmys up 40.5p to 719p, Rio Tinto ahead 149.5p to 3090p, Pennon 26p higher at 624.5p and Antofagasta up 53p to 1292p.

The biggest FTSE 100 fallers were John Wood Group down 35p to 780p, Hargreaves Lansdown off 13p to 750.5p, Arm Holdings 10p lower at 762.5p and BSkyB down 7.5p to 771.5p.