Britain's FTSE edges up, ARM jumps after strong results

Tue Apr 23, 2013 4:02am EDT

* FTSE 100 up 0.2 pct

* UK earnings season off to a strong start

* Mining sector makes technical 'death cross'

By Toni Vorobyova

LONDON, April 23 (Reuters) - Britain's FTSE 100 edged higher in early deals on Tuesday thanks to a crop of upbeat corporate earnings, but gains were capped by new signs of economic weakness in China and Germany.

The blue-chip index was up 9.90 points, or 0.2 percent, at 6,290.52 points by 0746 GMT, heading for what could be its second day of gains in eight sessions, and with some investors seeing value after recent weakness.

Chip designer ARM jumped 7.8 percent, while conglomerate Associated British Foods added 1.2 percent, after both posted forecast-beating results.

Although many UK blue chips do not report quarterly results, all of those which have done so to-date have met or beaten analyst expectations, compared to a rate of 50 percent for the STOXX Europe 600 index, according to Thomson Reuters StarMine.

"There were some good reports today from ARM Holdings, which can be seen as a bit of bellwether for the tech sector," said Jonathan Roy, sales trader at London Stone Securities.

"People had been quite cautious (on earnings) and there have been some quite nice surprises to the upside."

Technical analysts at Redmayne-Bentley highlighted 6,423 points - some 2 percent away - as the next key resistance level for the FTSE 100, while support is seen at 6,214 points, the bottom of the range of the past three months, hit on April 5.

However, the charts outlook for the FTSE 350 mining index looked negative, with the 50-day moving average crossing below the 200-day line this week in a pattern known as the 'death cross'.

The pattern, which usually signals further losses on a six- month horizon, had also formed on the industrial metals sector earlier this month.

The two sectors - the worst-performing so far this year - have been hit from a fundamental level by falling metals prices and concerns about the strength of future demand from top consumer China.

Such worries were further fanned on Tuesday, after data showed activity in China's vast factory sector slowing back to near-stagnation in April.

"We've had some pretty poor data from China again, and we've seen copper down 1 percent. They (the miners) are struggling to get their flooring down here. If we do continue to see bad data from China they are probably going to fall further," said Roy at London Stone Securities. (Editing by Stephen Nisbet)