Britain's top share index was higher by midday on Tuesday, boosted by miners, after data from China soothed investors' worries over the outlook for raw materials demand in the world's second-largest economy.
London's blue-chip index <.FTSE> was up 25.80 points, or 0.5 percent, at 5,683.24, as Wall Street futures pointed to a firmer open later on Tuesday, as the U.S. returns from Monday's holiday.
The FTSE, however, continued to struggle to break free from the shackles preventing a breakout posed by resistance built up around 5,700, which has held since early November.
Traders said the euro zone's debt crisis was preventing the index from moving substantially higher, although they were not surprised when Standard & Poor's followed its credit rating downgrade of nine euro zone nations over the weekend by cutting its rating on the area's EFSF rescue fund.
That two-way pull between positive China news and euro zone mess remains in place, Darren Sinden, trader at Silverwind Securities, said.
Breaking 5700 was only the first challenge that confronts bulls. Staying above that level and then besting the 3-month high (5,747) are the other components of that task, Sinden said.
Miners <.FTNMX8350> gained in tandem with base metals as China reported its economy grew at a pace better than some had expected, although it expanded at its weakest pace in 2-1/2 years in the latest quarter.
Traders said the data was not strong enough to stop Premier Wen Jiabao sticking to what he has called fine-tuning of economic policy settings -- from tax breaks for small firms to a cut in the required reserve ratio -- to counter the downturn.
Gerard Lane, strategist at Shore Capital, said despite the better-than-expected growth, he expected steps taken on the policy-easing path initiated a few months ago to continue in 2012, supporting asset prices in general and emerging market-exposed equities.
The data will come as relief for Rio Tinto
Integrated oils <.FTNMX0530> also rose, along with the oil price.
Capital goods firms such as IMI
The broker also raised its recommendation on the European capital goods sector to neutral, favouring those with exposure to the U.S., and downgraded UK-listed Cookson
Royal Bank of Scotland
Disposal of (RBS Aviation Capital) will release $2.5 billion (1.6 billion pounds) of risk-weighted assets, assisting RBS to reduce its wholesale funding commitment and strengthen core Tier 1 capital, Oriel Financials said, reiterating its buy recommendation on the stock.
Shore Capital upgraded RBS to neutral from sell on the back of its move to restructure the investment banking division.
Insurers gained, too, with insurance buyout vehicle Resolution
Although the outlook remains relatively challenging for life, and unexciting for non-life, we think we have identified promising niches, UBS said in a note.
UBS also put a short-term buy rating on blue-chip firm RSA Insurance
RSA, however, fell 1.7 percent, in heavy volume with traders citing media reports the firm is among insurers facing payouts after a cruise ship, owned by Carnival
Shareholders want the world's third-largest retailer to tighten rules on when its executives can trade shares, after a senior manager sold stock eight days before the company issued a profit warning that hammered its share price.
Retailers look set to face further pressure as UK unemployment hit a 17-year high with worse on the horizon as recession looms.
On the downside, Burberry
The shares were also pressured by a note from Bank of America Merrill Lynch which downgraded the European luxury goods sector to underweight from neutral on valuation grounds, but kept its neutral stance on Burberry.
(Editing by David Hulmes)