FTSE Edges Higher; Miners, Retailers Up, Oils Dip

By 0920 GMT the FTSE 100 was up 18.68 points or 0.4 percent at 4,598.32, after gaining 0.4 percent on Monday.

Britain's top share index edged higher early on Tuesday, maintaining a six-day post-Christmas rally as miners rose on firmer metals prices but gains were slim as data highlighted the fierce headwinds facing the economy.

By 0920 GMT the FTSE 100 was up 18.68 points or 0.4 percent at 4,598.32, after gaining 0.4 percent on Monday and is up from a low of below 3,700 set in late October.

Embattled banks were in the red after Britain's Financial Services Authority said late on Monday that its ban on short-selling financial stocks would expire on Jan. 16, but that it would reintroduce the ban without consultation if needed.

"To the naked eye bank shares look very cheap but of course if anyone starts digging underneath and look at the operating environment, we are going to see more non-performing loans, we are going to see more write-downs. The operating (environment) is far from positive," said Jeremy Batstone-Carr, head of private client research at Charles Stanley.

Royal Bank of Scotland, Lloyds TSB and HSBC fell between 0.2 and 2.4 percent.

The FSA also said it would extend rules requiring net short positions in financial stocks to be disclosed until June 30, although disclosure will only be required at 0.1 percent bands.

British consumer morale sank in December as worries about job losses resulting from the downturn intensified, with the Nationwide Building Society saying its confidence guage fell to its lowest since the survey began in 2004.

The UK's largest building society also reported that British house prices fell another 2.5 percent in December to make 2008 their worst-performing year on record.

However retailers Next and FTSE 250-listed Debenhams gained 5.9 and 24.6 percent respectively despite posting falling sales, as investors were relieved that the slide was not greater.

"While today's announcement does not radically mitigate the refinancing issue looming by 2011, it is certainly a much better outcome than might have been feared, i.e. profit downgrades and worries over covenant breaches," Cazenove said in a note to clients.

Iconic high street retailer Marks & Spencer gained 0.8 percent ahead of an update on Wednesday after the Times website reported that it is set to cut more than 1,000 jobs in stores, its head office and support functions following disastrous Christmas trading.

A spokeswoman for M&S declined to comment.

Miners Anglo American, Antofagasta, and Rio Tinto were up between 0.5 and 2.9 percent as copper, nickel and zinc prices were all in positive territory.

However oil producers BP and Royal Dutch Shell fell 0.7 and 1.4 percent respectively as crude prices retreated after rallying the previous session.

Investors are keenly awaiting an interest rate decision from the Bank of England on Thursday. Analysts polled by Reuters forecast that the Monetary Policy Committee will opt to cut rates by 50 basis points 1.5 percent.

Investors will also look to U.S. data for clues on the health of the global economy.

"Traders will also be paying close attention to the release of the US ISM non-manufacturing numbers (for December at 1500 GMT), which should give as a hint at how the industry is doing," Evans at Betonmarkets.com said.