A rally in the mining sector propelled London's FTSE to a level last seen at the beginning of October 2008 this morning.

There has been a lot of encouraging macroeconomic data emanating from both sides of the Atlantic recently, which is supporting the global economic recovery story and encouraging analysts to lift their earnings estimates for commodity based shares.

An interesting article published on Bloomberg News this morning revealed that resource shares, although trading at expensive price multiples are, in fact, still cheap on a forward basis; Bloomberg explains that investors have paid an average of 33.1 times earnings this year for copper, plastic and seed producers listed on the S&P 500 – this is substantially above their historical average price-earnings ratio of 23.2 times.

The news provider moves on to explain that their price to earnings multiple is expected to halve to 17.7 (based on 2010 earnings estimates), however. This would be the steepest price-earnings ratio decline for any S&P 500 listed group and leaves commodity based companies appearing 23% less expensive than their historical average, it said. This explains why investors have been so keen to buy commodity shares.

'You tend to want to buy these stocks when the multiples are high and about to move lower,' explains Leo Grohowski of BNY Mellon Wealth Management. 'You've got these huge earnings swings coming up, and a lot of investors, like us, are looking ahead for a better 2010.'

Positive news about the UK and eurozone economies helped miners advance; Kazakhmys traded 5.45% higher at 977p, Rio Tinto gained 4.3% to 2500p, Antofagasta climbed 3.7% to 809.5p and Fresnillo advanced 3.72% to 643.5p this morning.

Banks were also in demand, with the Lloyds Banking Group outperforming rivals, up 6.4% to 108.1p on hopes that the bank will sell off further non-core assets; an unidentified source told the Mail on Sunday that Resolution was in talks with Lloyds Banking Group. The Times, meanwhile, today reported that RBS and Lloyds Baking Group are selling repossessed property assets to their own subsidiaries, in a bid to stave off billions of losses that would be incurred if the repossessed assets were sold in the open market.

Shares of RBS climbed 5.7% to 51.25p, Barclays climbed 1.8% to 358.15p while Standard Chartered rose 0.8% to 1421p and HSBC edged 0.24% higher to 660.70p.

Global advertising company WPP was also among the best performing shares this morning, up 5% to 530p after RBS raised its price target from 475p to 550p.

Oil and gas services provider Petrofac fell nearly 2% to 896p by mid-morning, erasing earlier gains which came after it reported a 16% increase in interim profits of $207.5 million. Petrofac had also said that its full-year earnings are expected to rise by 20%.

Defence technology group QinetiQ rose 1.4% to 142.4p this morning after announcing that it had secured a AUS$23 million contract from the Australian Department of Defence. Defence company Rolls-Royce climbed 1.4% to 452.9p after announcing that it has won two more contracts from PetroChina relating to the West to East Gas Pipeline Project.

Bucking the positive trend was support services provider G4S (Group4), which fell 4.2% to 214.7p, despite reporting improved profit margins and raising its dividend on the back of higher interim profits. The company's interim earnings rose 13.4% to £229.8 million and hiked its dividend up by 10% to 3.02p per share.

Elsewhere, there were two positive surveys released overnight; Institute of Chartered Accountants in England and Wales (ICAEW) said that UK business confidence has turned positive for the first time in two years while the Confederation of British Industry (CBI) said the UK service sector could see a pick-up in business in the coming months. In the meantime, a separate report revealed that European industrial orders rose more than expected in June; European orders rose 3.1% from May, beating Bloomberg's median estimates for a 1.8% increase.

By around 10.35am (London time) the FTSE 100 was up by 33.73 points (+0.70%) to 4884.62 while the broader FTSE 250 was 107.19 points (+1.24%) above its previous close at 8786.02. In the meantime, September Dow and S&P 500 futures were trading between 0.27% and 0.35% ahead, suggesting the market currently expects Wall Street to open higher this afternoon.