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Energy shares rise as FTSE holds above 6,000

Published 12/29/2010, 03:45 AM
Updated 12/29/2010, 03:53 AM
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* FTSE flat, remains near 30-month highs

* Energy shares helped by crude demand

* Miners wane on concern over China rate hike

By David Brett

LONDON, Dec 29 (Reuters) - Britain's top shares stayed above the 6,000 level early on Wednesday as UK investors returned to their desks after the Christmas break, with gains in energy shares offsetting weakness in miners.

By 0830 GMT, the FTSE 100 was up 1.96 points at 6,010.88, having closed at a fresh 30-month high on Friday and above 6,000 for the first time since June 3, 2008.

The FTSE remains on course for it strongest December since 1987 when it rose 8.5 percent. It is up 8.4 percent so far this month, albeit in wafer thin volume.

"The FTSE continued to crawl near the psychological 6,000.00 level without much fanfare," said Enis Mehmet at Autochartist.

"Traders seem to be content with the market at this level, feeling neither too bullish nor bearish ... This could be a sign that traders are becoming concerned about the strength and direction of this index."

Energy shares were the biggest gainers as crude prices held near a 26-month high above $91 a barrel. A blizzard on the U.S. East Coast will likely boost demand for heating oil, with U.S. inventory data also awaited.

On the downside, miners were lower on worries over the demand outlook after China's move on Christmas Day to raise interest rates by a quarter-point.

However, precious metals miners bucked the wider sector trend, with Randgold Resources and Fresnillo up 3.7 and 1.1 percent respectively, as investors ploughed money into gold and silver, regarded as safe havens in turbulent economic periods.

Banks were also a weight on London's blue chips, with concerns over Europe's debt problems still lingering in the background.

Smith & Nephew fell 1.8 percent after the U.S. Food and Drug Administration on Tuesday warned the orthopaedic device maker that it failed to establish adequate manufacturing validation procedures for a hip replacement device.

Alliance Trust, BT Group, Burberry Group and Experian took 1.08 points off the FTSE 100 index after losing their payout attractions.

There was no domestic data due for release on Wednesday, while in the U.S., the latest weekly U.S. mortgage and refinancing index is due at 1200 GMT. (Editing by Jon Loades-Carter)

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