* FTSE 100 up 0.2 pct to 6,570.20 pts
* Prudential offers biggest boost after Asia plans
* Fed tapering worries curb market gains
By Francesco Canepa
LONDON, Dec 10 A rally in insurer Prudential helped Britain's top share index to edge higher on Tuesday, although its gains were capped by expectations of a tightening of the U.S. ultra-easy monetary policy after hawkish comments from central bank officials.
Prudential, up 2.1 percent to 1,292 pence, was the single biggest contributor to the FTSE 100's rise after the British-based life group set new growth objectives, driven by its Asian business.
"The market is fairly confident with (chief executive) Tidjane Thiam achieving future targets as well as generating a decent amount of cash from his operations," Manoj Ladwa, head of trading at TJM Partners, said.
"The underlying fundamentals seem to be in place for a sustained upward move," he added, expecting the shares to hit 1,500 pence over the next 12 months.
Prudential's stock added 2.58 points to the FTSE 100, which was up 10.72 points at 6,570.20 points by 1114 GMT, rising for a third straight day and extending its rebound from a nearly two-month low of 6,479 points hit last week.
Investors welcomed news that Lloyds Banking Group boosted its capital by 680 million pounds ($1.11 billion) from the sale of its remaining 21 percent stake in wealth manager St James's Place, while speculation about a takeover approach boosted valve-maker Weir Group.
Technical charts were another source of support.
"There are a number of significant support levels just below the market which should prevent further weakness and allow bulls to gain traction," said Ed Blake, technical analyst at Informa Global Markets, highlighting a cluster of trendlines and Fibonacci numbers from 6,485.00 to 6,435.61 points.
"In terms of resistance, the first significant level is the Nov. 13 former low at 6,613.98 points."
The FTSE has been trading between 6,530 points and 6,570 points this week as investors weighed the benefits of a stronger U.S. economy against the threat of an early cut to the Federal Reserve's equity-friendly stimulus programme.
Several Fed members overnight backed the scaling back of the asset-purchase scheme, which has helped the FTSE rise 16 percent since it was announced in September 2012, as soon as next week's meeting.
St. Louis Federal Reserve Bank President James Bullard, who is sometimes seen as a bellwether for U.S. monetary policy, unexpectedly voiced support for a "small taper". Two of his colleagues, meanwhile, said the risks of continued super-easy monetary policy exceed the benefits.
"People are ... very reluctant to sell out given the historical Santa (Christmas) rally, but they are also reluctant to buy given the Fed meeting next week," said Jonathan Roy, sales trader at London Stone Securities.
"I think they (the Fed) are preparing the markets for the situation when they do taper, but whether it happens in December or not remains to be seen."
While some investors fret that a less supportive monetary policy by the Fed could unsettle markets in the short term, a stronger U.S. economy would be positive for global stocks in the longer run.
"We're meandering a bit at the moment and the tone is quite volatile," Mike Franklin, investment strategist at Beaufort Securities, said.
"It's all about nothing, really. Tapering is not an automatic shift to higher interest rates. Our general outlook for equities is generally encouraging."