Britain's FTSE 100 pauses at five-year highs
* FTSE up 2.9 points
* Index stalls at 6,500 - five-year highs
* IHG rises after UBS upgrade
* Miners dip, Fresnillo falls after results
* British Land down after fund raising
By David Brett
LONDON, March 12 (Reuters) - Britain's top share index was flat on Tuesday with gains in leisure firms offsetting losses among miners and real estate investment companies as the index paused around five-year highs before a potential break higher.
By 0904 GMT, London's blue chip index was up 2.9 points at 6,506.53, having closed above the 6,500 level on Monday for the first time since 2007.
Despite the FTSE 100 stalling at five-year highs and 2013 volumes weaker than last year's, investors remain upbeat.
"We can still break higher, particularly in European markets ... There are still people being sceptical and holding cash, so there's still money to come back," Colin McClean, managing director at Scottish Value Management, said.
Volatility - a crude gauge of investor fear - closed below 12 for the first time since 2007 on Monday, meaning investors appear more sanguine than they have since the credit crisis began.
"The solid close at 6,503.63 on Monday has the FTSE in a position to challenge the January 2008 top at 6,534.70," said James Hyerczyk, technical analyst at Autochartist.
Intercontinental Hotels led leisure firms higher, up 2.6 percent after UBS upgraded the company to "neutral" from "sell".
"The market is right to view IHG as a high-quality play on the structural growth of the hotel industry, geared to cyclical recovery," UBS said in a note, although it added there may be some stock-specific growth issues the market is not taking into account.
Other leisure firms rallied too with Tui Travel up 1.4 percent after UBS initiated coverage on its parent Tui AG with a buy rating. The investment bank was also bullish on restaurant group Whitbread, which gained 1.3 percent.
"There is a lot of sectors like travel and leisure industrials and technology that all look great technically," Scottish Value's McClean said.
British Land was the top faller on the FTSE 100, down 2.7 percent after the real estate firm opted to tap the market for 500 million pounds - diluting the value of its shares - to fund new investment and sold off part of its London portfolio.
"The argument appears to be that they have bought over 200 million pounds of assets recently, have a further 150 million pounds in 'advanced negotiation' and a growing pipeline of opportunities," Investec said in a note.
"All fair enough, but we are interested to know if gearing will return to pre-placing levels or if lower gearing is the real driver of the deal," it said.
The announcement from British Land knocked peers such as Land Securities and Hammerson, which fell 1.1 and 0.8 percent, respectively.
Miners continue to struggle to gain traction with investors as the outlook for growth remains tepid after downbeat China data over the weekend.
Mexican miner Fresnillo shed 2.5 percent after its 2012 profit slumped 19 percent.
Global miner Rio Tinto fell 0.9 percent on reports it has slowed development of its multi-billion investment in Guinea's untapped Simandou iron ore deposit and slashed staff.
The mining sector is down 0.8 percent in 2013, compared with a 10.3 percent rally on the FTSE 100.
Copper miner Antofagasta, however, rallied 3.7 percent as it sought to brush off investor worries about its growth options with a better-than-expected 2012 payout and special dividend.
"Big positive is the final dividend ... In the current 'show me the money' environment for miners, we expect this to be taken well by the market," BofA Merrill Lynch said in a note.
(Editing by Catherine Evans)