* FTSE 100 gains 0.6 percent
* Banks, commodities firmer, earnings optimism persists
* Sainsbury falls despite strong results
By Simon Falush
LONDON, Jan 12 (Reuters) - Gains from banks and miners lifted Britain's top share index early on Tuesday, supported by growing optimism on company earnings, though debt auctions in Spain and Portugal were awaited for signs of euro zone stress.
By 0850 GMT, the FTSE 100 was 32.79 points, or 0.6 percent, higher at 6,046.82 after it closed up 1 percent on Tuesday.
Banks were the biggest support to the index, adding to strength the previous session as they benefited from a growing conviction that the recovery in corporate fortunes will endure.
Barclays added 1.4 percent while HSBC rose 1.6 percent.
Miners were also firmer, deriving support from firmer metal prices. Kazakhmys added 2.7 percent while Eurasian put on 2.5 percent.
"People have decided that equities have decoupled from the economic realities of life," said David Buik, senior partner at BGC Partners. "If the quality of the earnings comes in as people are expecting then equities will continue to be the only game in town."
The euro zone debt situation was back in focus. Portugal's first debt auction of the year was set to tap bond investors for around 1.5 billion euros, while Spain will seek up to 3 billion on Thursday.
Markets were keen to see if the two countries will be able to fund themselves at a sustainable cost or be forced to turn to the European Union and IMF for financial aid.
SAINSBURY SLIPS
Sainsbury was among the sharpest fallers, down 0.9 percent, as a trading update showing strong sales of premium groceries failed to impress investors who were already expecting a robust showing from the supermarket group.
Vodafone was the biggest single drag on the index, shedding 0.9 percent after the mobile phone heavyweight was downgraded to "equal weight" from "overweight" in a bearish note on the European telecom sector from Barclays.
On the economic front, British shop price inflation edged higher in December, although heavy discounting by retailers prevented an even bigger rise, a British Retail Consortium survey showed on Wednesday.
And the rate at which British recruiters filled permanent and temporary vacancies eased in December, although demand for new staff was strong, a Recruitment and Employment Confederation survey said on Wednesday.
British trade balance numbers will be released at 0930 GMT, with a global trade deficit of 8.33 billion pounds, and a non-EU deficit of 4.80 billion forecast.
Across the Atlantic, December U.S. export and import prices will be released at 1330 GMT, together with the latest weekly mortgage index, although the main focus will be on the December Federal Budget, due at 1900 GMT.
Ex-dividend factors clipped 0.30 point from the FTSE 100 index on Wednesday, with British Land and Lonmin both losing their payout attractions.
Technical analysts maintained a cautious outlook for the FTSE 100.
"Longer-term traders should pay close attention to how the FTSE reacts at a pair of bottoms at 5,939.89 and 5,911.02," said James A. Hyerczyk, an analyst at Autochartist.
"The penetration of both of these bottoms will signal a bearish shift in investor sentiment. This will be a strong signal that the index is poised for an even bigger correction with 5,804.84 to 5,737.43 the preliminary target zone." (Editing by Jon Loades-Carter)