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FTSE slightly firmer, aided by miners, U.S. data

Published 12/10/2010, 12:21 PM
Updated 12/10/2010, 12:24 PM
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* FTSE 100 gains 0.1 percent

* Miners up; copper near record high on China imports data

* Banks weak; StanChart slips on BofA ML downgrade

By Tricia Wright

LONDON, Dec 10 (Reuters) - Britain's top share index closed slightly higher on Friday, buoyed by firmer mining stocks with copper near record highs, and as encouraging U.S. data bolstered investor sentiment.

The FTSE 100 closed up 4.99 points, or 0.1 percent, at 5,812.95, in thin volume, notching up a 1.2 percent gain over the course of the week.

"The consumer confidence numbers were quite good from the U.S. (and are) supporting the market," Henk Potts, equity strategist at Barclays Wealth, said.

"Broadly, the combination of steady and modest economic growth, low interest rates and rising corporate profitability should continue to generate respectable returns for investors."

Miners were in demand as copper rose after strong Chinese import data boosted the demand outlook. Vedanta Resources was the top FTSE 100 performer, putting on 3.2 percent.

But analysts said sentiment surrounding the sector was soured by worries over potential interest rate hikes in China.

"Speculation has been growing that China's set to raise interest rates ... that has the potential to hold back the rally that we've been seeing in mining stocks," Potts said.

China's central bank on Friday raised the amount of money the country's lenders must keep on reserve for a third time in a month, following a spate of robust data that strengthened the case for policy tightening.

Banks were out of favour, handing back some of the previous session's gains.

Standard Chartered topped the blue-chip fallers' list, off 2.6 percent, after BofA Merrill Lynch cut its rating on the Asia-focused bank to "neutral", calling its trading update on Thursday "disappointing relative to expectations".

Back on the upside, Cobham climbed 2.9 percent. The Daily Express said the aerospace electronics group's recent share price weakness left it vulnerable to a predatory approach.

Diageo climbed 1 percent. The drinks firm is in preliminary talks to buy Turkish spirits company Mey Icki, people familiar with the matter said, as part of the push by the company into high-growth emerging markets.

"The price activity throughout this week for the FTSE has been 'yawnsome'. A mere 100 points trading range, it looks like the market has shut up early for Christmas," Angus Campbell, head of sales at Capital Spreads, said.

"Now that the EU leaders have agreed to meet again next week to discuss what steps to take in order to contain the European debt crisis, it's quite conceivable that we'll see similar price action until that point," he said. (Editing by David Holmes)

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