Mining Strength Pulls FTSE 0.3 Pct Higher Early On

By 0855 GMT, the FTSE 100 index was 12.52 points higher at 4,176.98.

Britain's top share index was 0.3 percent higher early on Wednesday, extending Tuesday's rise as gains by miners following solid results from BHP Billiton offset some hefty ex-dividend considerations.

By 0855 GMT, the FTSE 100 index was 12.52 points higher at 4,176.98. The UK blue chip index closed 86.68 points, or 2.1 percent higher at 4,164.46 on Tuesday, snapping a three session losing streak.

The gain would have been higher but ex-dividend factors took 13.77 points off the FTSE 100 index, with heavyweights AstraZeneca, Royal Dutch Shell and Sage Group all losing their dividend attractions.

Strength in heavyweight mining issues provided the main counter-balance to the ex-dividend stocks as investors digested results from the world's biggest miner BHP Billiton and production news from Eurasian Natural Resources.

"It seems very much that the market is being driven by corporate news flow at the moment," said Jeremy Batstone-Carr, head of private client research at Charles Stanley.

"A steady start ... obviously a good turn around from negative territory," Batstone-Car said. "It would be nice to think we could build on that but obviously there are sufficient uncertainties out there to ensure that all going is pretty hard work."

BHP shares gained 3.6 percent after it reported a 2.2 percent increase in first-half profit, aided by a last burst of Chinese demand growth.

ENRC posted a 22 percent fall in fourth-quarter production of ferroalloys, its most profitable metal, and reiterated a gloomy forecast for 2009.

However ENRC shares gained 7.5 percent boosted, together with peer Kazakhmys up 6.8 percent by news of a devaluation of the Kazak currency, cutting costs for both.

Among other miners, Rio Tinto, Anglo American and Antofagasta added 2.2 to 3.3 percent.

Insurer Aviva was also a top blue chip gainer, up 5.5 percent after the firm reassured on its capital strength and said its dividend policy was unchanged as it reported a better-than-expected 8 percent jump in full-year sales.

BSkyB firmed 2.1 percent after news the satellite group has won the rights to broadcast four out of six Premiership League packages from 2010-2013..

The Bank of England (BOE) begins a two-day policy-setting meeting later and analysts are expecting the central bank to cut interest rates by half a percentage point to 1.0 percent when it announces its decision on Thursday.

A leading economic think-tank said the UK's economy is set to contract at its sharpest rate in 60 years in 2009 and the BoE will need to do more than cut rates to kick-start growth.

British consumer morale slumped to a record low in January because of worries about job losses and the deepening economic downturn, a survey showed.

Investors will get another glimpse of the state of the UK's recession-hit economy with the release of the service sector PMI survey for January at 0928 GMT.

BROKER COMMENTS IMPACT

A number of broker recommendations also provided some direction for blue chips on Wednesday morning trade.

Reed Elsevier took on 2.1 percent after Morgan Stanley raised its rating to "overweight" from "equal-weight", while RBS hiked its target price for the publishing group.

Kingfisher added 1.9 percent as Seymour Pierce upgraded its rating to "buy" from "hold" and raised the UK general retail sector to "overweight" in a review.

But International Power fell 2.0 percent after Citigroup pulled back its rating to "hold" from "buy" as its feels the outlook for its markets in 2009 has deteriorated.

Power generation peer Drax Group lost 1.3 percent, with both stocks reversing gains seen on Tuesday.