Strength in heavyweight miners and banks led the FTSE 100 <.FTSE> index higher on Friday, extending the previous session's rally in tandem with gains on Wall Street and in Asia on upbeat U.S. data.

At 0857 GMT, the UK blue-chip index was up 28.14 points, or 0.5 percent, at 5,429.00, having added 0.6 percent on Thursday, though volume was thin ahead of quadruple-witching expiries of individual stocks and index futures and options at around 1000 GMT.

Investors seem to be largely repressing concerns over the euro-zone situation, substituting substantially better than expected U.S. data as a catalyst for optimism and ignoring the raft of concerns over a possible euro break-up, said Shavaz Dhalla, Financial Trader at Spreadex.

It's possible that only these optimistic investors remain in a thin market driven by archaic sentiment and antagonised by conspicuous and pessimistic rating agencies, Dhalla added.

Miners <.FTNMX1770> provided the main strength for the FTSE 100 index early on, with the risk-sensitive sector boosted by firmer metal prices after sharp sell-offs earlier in the week, and with broker comment also supportive.

Liberum Capital, in a 2012 sector preview, pointed out that, with the exception of commodities trader Glencore , the Big Five miners have silently re-rated in recent months, while earnings downgrades loom.

Nevertheless, the broker says value remains apparent, adding that it favours Glencore, BHP Billiton and Anglo American , on all of which it has buy ratings.

Integrated oils <.FTNMX0530> were also higher as crude prices ticked up after recent falls.

BP added 0.3 percent. Cameron International has agreed to pay $250 million to BP in return for the oil major indemnifying the U.S. company against current and future compensatory claims associated with the Gulf of Mexico Deepwater Horizon oil spill incident in 2010.

Banks <.FTNMX8350> were higher, too, with Royal Bank of Scotland and Barclays up 1.2 percent and 0.7 percent, respectively.

Barclays shrugged aside news that it was one of seven global lenders that Fitch downgraded credit ratings on Thursday.

CARNIVAL FETED

Among individual blue chips, Carnival Corp gained 1.8 percent after HSBC upgraded the cruise ship operator to overweight from neutral and raised its target price, citing the sales outlook in Europe and the United States, bunker fuel trends and the firm's low valuation.

Broker comment also gave a lift to British Land , up 1.7 percent, as UBS added the stock to its 1st eleven, at the expense of Vodafone , citing the former's 5.9 percent dividend yield, together with the prospect of the resumption of a progressive policy in May 2012.

But satellites operator BSkyB , down 1.9 percent, was blighted by a broker downgrade, with BofA Merrill Lynch cutting its rating to neutral from buy, with a reduced target price of 770 pence from 800 pence, after lowering its operating profit forecasts.

Technical analysis for the FTSE 100 index remained cautious.

(Thursday's) 24-point advance was hardly emphatic, and it leaves the UK index below its 50-day MA (and well below the highs that were being recorded last week, at 5,631), said Bill McNamara, technical analyst at Charles Stanley.

The chart shows that the trading range is narrowing, with resistance now at 5600 or so and support at around 5200, and it is still not clear what the catalyst will be that will trigger the inevitable break-out.

No important British economic data will be released on Friday, so investors were focused on a U.S. consumer inflation numbers, due out at 1330 GMT, with a 0.1 percent rise in CPI seen in November, after a 0.1 percent fall in the previous month, giving an unchanged annualised rate of 3.5 percent.

(Editing by Will Waterman)