* FTSE 100 up 0.3 pct at 5,884.12 pts
* Chinese stimulus speculation boosts miners
* Index capped below 5,900 on U.S., Spanish fiscal concerns
By Francesco Canepa
LONDON, Dec 5 (Reuters) - British blue-chips made small gains on Wednesday as speculation about growth-boosting policies in China lifted commodity-related stocks, but sentiment was capped by concerns on the European and U.S. economies.
Industrial metals stocks rose 2.4 percent and miners added 2.1 and the copper price hit a seven-week high after the chief of the Chinese Communist Party said the world's largest consumer of metals will make policies more targeted to help the economic recovery. .
At 1138 GMT, Britain's FTSE 100 index was up 14.91 points, or 0.3 percent at 5,884.25 points, with miners adding 13 points to the index, and 7 of the top 11 gainers coming from the mining sector.
Traders were monitoring a UK budget update at 1230 GMT from finance minister George Osborne but they said the speech was unlikely to have a significant impact on the FTSE, assuming most measures have already been announced or leaked.
"I wouldn't be surprised if we had a quick 50-60 point move on the FTSE next week because (stimulus measures are announced) in China," said Dan Reed, a trader at HB Markets.
Barring any announcement in China, however, Reed expected more range-bound trading in the days ahead and had opened a short position on the FTSE at 5,900 points, with 5,850 as a new entry level.
The FTSE has failed to push above resistance at 5,900 three times in the past week, in a sign appetite for equities is capped as investors fret about fiscal negotiations in the United States and Spain's ongoing debt issues.
U.S. legislators are discussing a deal to avoid a $600 billion package of tax hikes and federal spending cuts that would begin Jan. 1 and could push the world's largest economy into recession.
HB's Reed expected an agreement to be reached by the end of the year, likely pushing the FTSE above 5,900 and close to 6,000, but he warned there was a risk the index would dip as negotiations get closer to the deadline.
Also erasing some early gains on the FTSE on Wednesday was a disappointing bond auction in Spain which did not manage to sell the full amount of bonds on sale. Investors are awaiting the Spanish government's move to trigger European Central Bank bond-buying.
With little progress being made on the political front and the holiday season approaching, trading volume on the FTSE was thin at just above 20 percent of the full-day average.
Among the few heavily-traded stocks was supermarket Tesco , which rose 2.9 percent after unveiling a solid third-quarter trading update and launching a strategic review of its loss-making United States chain Fresh & Easy.
In his budget update at 1230 GMT, Osborne, who will give details of his plans to invest 5 billion pounds ($8 billion) in schools, science and transport projects, the government said on Tuesday.
"Unless he makes changes to stamp duties, which would affect property companies, it's probably going to be a non-event," HB's Reed said.
Osborne will also update official economic growth and government borrowing forecasts, expected to show a deterioration on both fronts, against the difficult backdrop of falling construction activity and weak retail sales.
"The chancellor will probably miss his target of expecting net debt to fall relative to output in FY 2015/16," Rob Wood, chief UK economist at Berenberg, said.
"One thing to watch is whether the Chancellor uses his raid on the interest accumulating on the BoE's gilt holdings to flatter the figures. If he does, the forecasts will lose a chunk of credibility." (Additional Reporting By Alistair Smout; editing by Stephen Nisbet)