The FTSE 100 were higher on Thursday morning ahead of interest rate decisions from the British and European Union central banks and an EU summit, where it was hoped a deal will be struck to end the euro zone's two-year debt crisis.
The benchmark index <.FTSE> was up 12.10 points, or 0.2 percent, to 5,559.01 by 9:18 a.m., having fallen 0.4 percent on Wednesday. Miners <.FTNMX1770> led Britain's top share index higher, helped by a swathe of broker comment.
Traders said any moves were likely to be tentative until something official comes out of Europe, with the summit set to conclude on Friday. For the time being, the index was seen in the 5,500-5,600 range of the past six trading days.
Early gains echoed a rise overnight on Wall Street, which came on the back of talk of a coordinated G20 bailout fund for Europe, to be lent via the International Monetary Fund, later denied by an IMF spokesman and a G20 official.
What we are looking for at the summit is a commitment to further union and fiscal integration, which is what the euro zone needs to fix this problem, David Morrison, market strategist at GFT Global, said.
Morrison said if investors were long of equities heading into the summit he would advise hedging, such as a small short on the FTSE, just in case politicians disappointed again.
The FTSE has come a long way running on fumes so there is a potential for a nasty sell-off (if the markets do not get what they want).
As EU leaders sit down to discuss how to end the region's debt crisis and calm nervous markets, the Bank of England and European Central Bank could provide a lift to investors when they announce their latest interest rate decisions at 12:00 p.m. and 12:45 p.m., respectively. Traders were looking for signs of the banks pumping more cheap money into the financial system.
Economists expected the Bank of England to keep interest rates at their record low of 0.50 percent and to wait before expanding its current asset purchase programme, which ends in February.
The ECB, however, was expected to cut rates and unveil a new package of bank aid, while investors will also look for any hint the central bank will intensify its bond buying support for the euro zone's struggling peripheral economies, setting the stage for Friday's critical euro zone summit.
DIGGING DEEP FOR GAINS
Copper miners Kazakhmys
Copper equities offer attractive value, with the sector trading at 0.8 times NPV and 4 times 2012E EV/EBITDA ... Furthermore, companies have the ability to reinvest in growth with the majority having unleveraged balance sheets.
Traders said Anglo American
As the risk trade appeared to be back on in early deals, banks <.FTNMX8350> climbed higher as a sector.
Trading in Standard Chartered
Citigroup said the sovereign and banking crisis in the euro zone will lead to a protracted recession.
The broker said it favoured emerging market plays in the developed world and is overweight in British equities due to its heavy weighting of commodity companies and remains neutral on Europe excluding Britain, given the current concerns.
However, it suspected the region will enjoy considerable outperformance if authorities take credible steps to address sovereign concerns.
There was more gloom for the retailers in the face of austere economic conditions in Europe, following weak results from German group Metro and British company Kesa
Credit Suisse said economic conditions in Europe will likely lead to a difficult recession, although it was no longer factoring a global recession into its valuations and believed the stocks in its coverage were pricing in low growth.
Elsewhere, oil major BP
It also received the latest legal salvo from a major contractor, as it continues to deal with fallout from last year's massive oil blowout in the Gulf of Mexico.
There were no major British economic data due to be released on Thursday.
(Editing by Dan Lalor)