The FTSE 100 rose on Wednesday in thin holiday trade, as gains in defensives outpaced waning riskier mining stocks as the index edged towards key resistance levels.
London's blue chip index <.FTSE> was up 34.95 points, or 0.6 percent, at 5,547.65 by 12:07 p.m. BT, extending the pre-Christmas rally which has seen the blue chip index turn marginally positive for December, although trade was thin at just 17 percent of the FTSE 100's average 90-day volume.
Traders said there was little to prevent the UK's benchmark index nearing early December highs of around 5,590 but beyond that uncertainty prevailed from a technical standpoint.
The immediate outlook remains mixed. On the upside strong resistance is seen near the upper bollinger band and the 200-day moving average at the 5,616 level, said Atif Latif, a director at Guardian Stockbrokers.
A clear break above 5,616 is required for the index to come out of the consolidation zone. Above 5,616, resistances are at 5,690 and 5,745 levels.
The broader global economic outlook -- large debts, low growth -- remains a concern for investors and a key psychological hurdle preventing UK equities from breaking out of their current range, and those worries are set to peg back the FTSE 100 next year.
Angus Campbell, head of sales at Capital Spreads, who sees the FTSE 100 grinding up to 5,800 by end-2012, said: With so much continued uncertainty investors will probably be spending most of 2012 walking a tightrope. As a result tentative investors will probably want to think about conserving capital as well as the potential for a little bit of upside.
This means defensive stocks have to be considered as part of any equity portfolio, he said, adding Centrica
It was the defensives -- which have largely outperformed the FTSE 100's 6 percent fall in 2012 -- which led the index higher on Wednesday.
British American Tobacco
The world's No.3 retailer Tesco
And traders said the prospect of better ad revenues on the back of decent TV audience figures for its top-rated Christmas shows helped lift ITV
Banks gained although it was the two defensively perceived Asia-focused lenders HSBC
Integrated oils <.FTNMX0530> gained as crude prices held above $109 a barrel after rallying for six straight sessions.
Crude prices were supported by a threat from Iran to halt oil shipments through the Strait of Hormuz if foreign sanctions were imposed on its crude exports over its nuclear ambitions.
Miners <.FTNMX1770> lagged the broader index gains as copper prices dropped, snapping four days of gains on concern demand may wane after a report said U.S. single-family home prices fell slightly more than expected in October.
A bigger-than-expected slump in Japan's November factory output after Europe's debt crisis and flooding in Thailand hit major manufacturers also hurt copper prices.
International Airlines Group
Luxury goods group Burberry
(Editing by Jon Loades-Carter)