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UK stocks : FTSE 100 up 0.3 pct

Agencies

Posted: Dec 04, 2012 at 0331 hrs IST

London Uk stocks closing: UK shares rose on Monday, supported by strength in heavyweight mining and energy stocks after data showed China's manufacturing sector expanded for the first time in over a year.

Miners provided around a quarter of the FTSE 100's index's points gain as the sector tracked a copper price that rose on the improved PMI figures from the world's top metals consumer.

The latest readings from official and private sector surveys of China's vast manufacturing sector showed activity picked up November, adding to evidence the economy is reviving after seven quarters of slowing growth.

Data on Monday also showed British manufacturing activity shrank much less than expected in November, although the sector remains in a precarious state as new orders edged down.

At 1141 GMT, the FTSE 100 was up 19.94 points, or 0.3 percent, at 5,886.76 points, with volumes modest at 20 percent of the 90-day daily average in the first session of the final month of 2013.

Traders had mixed views over whether the UK stock market would advance much further due to uncertainty over the U.S. "fiscal cliff" - a combination of spending cuts and tax rises due to be implemented in early 2013 that could tip the world's leading economy back into recession.

"Any comment about markets in December is heavily contingent on the daily progress of the U.S. fiscal cliff debate as well as no further accidents in Europe," said Andrew Bell, Chief Executive of Witan Investment Trust.

"Both of these problems look under control, with some form of acceptable outcome/kicking of cans down the road (more) likely than a financial crisis. However... it remains possible that the U.S. will go over the cliff and climb back or look like doing so, or that renewed dissent will emerge in Europe."

FINANCIALS MIXED

Fund management group Schroders was the top blue chip performer, gaining 3.5 percent as BofA Merrill Lynch upgraded its rating for the firm to "buy" from "neutral".

"We have liked Schroders as a business for some time, but now believe that the combination of strong positioning and a supportive backdrop outweighs the disadvantage of an over-padded balance sheet," BofA ML said in a note.

Fellow financial services group Hargreaves Lansdown, however, was the biggest FTSE 100 faller, shedding 2.4 percent, with traders citing some uncertainties for the sector ahead of Wednesday's half-yearly budget update from finance minister George Osborne.

Osborne faces the tough choice of either announcing more spending cuts or delaying his debt target.

British media reported on Sunday he was poised to announce plans to cap the pension benefits of high earners, alongside a reining in of the welfare budget, which could impact financial services groups.

"It's going to be a relatively dour message from Osborne ... It'll be a reminder of the tough conditions for Britain as the austerity measures bite. For that reason we would favour being exposed to U.S. markets, and high-beta Europeans rather that the UK for the time being," Henk Potts, market strategist at Barclays Wealth said.

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