Banks, miners nudge Britain's FTSE to three-week high

Wed Apr 2, 2014 7:47am EDT

* FTSE 100 index up 0.2 percent

* Focus on U.S. economic data; cyclical shares up

* Pearson, Resolution slip after trading ex-dividend

By Tricia Wright

LONDON, April 2 (Reuters) - Britain's top shares rose to three-week highs on Wednesday as encouraging economic news in the United States bolstered cyclical banks and mining companies.

The FTSE 100 was up 15.33 points, or 0.2 percent, at 6,667.94 points by 1128 GMT, its highest since March 12.

Technical analysts saw scope for the index to move towards the top end of the range where it has been stuck since late October, between about 6,400 to 6,800.

Barclays Capital analyst Lynnden Branigan cited a strong close on Tuesday, when the index closed above its recent mini trading range, where resistance was seen around 6,620, as a positive. An intra-day move on Wednesday above its 100-day moving average at 6,658 could signal more gains.

"I think in terms of upside, we're now initially looking at a Fibonacci retracement (of the down-move from late February to late March) at 6,723," he said.

Helping to underpin the gains was a report on Tuesday that showed U.S. manufacturing expanded in February, one of the latest signs the economy was regaining its footing after a brutal winter.

Cyclical shares were in demand, with the UK mining index rising 0.8 percent and the banking index up 0.4 percent, on expectations that more data will point to a gradual improvement in the U.S. economy.

Focus will now shift to the U.S. durable-goods orders and ADP National employment numbers, before the closely watched non-farm payroll release on Friday. Sentiment improved after the Institute for Supply Management said on Tuesday its index of U.S. national factory activity rose to 53.7 last month from 53.2 in February.

"I was neutral from a short-term perspective going into yesterday's ISM data, but after seeing above-53 readings, I'm now a short-term bull," said Mike Jarman, chief market strategist at H2O Markets. "Yesterday's all-time closing high for the S&P should see markets higher this month. I expect continued outperformance from Europe."

Limiting the index's gains were stocks trading ex-dividend - including Resolution and Pearson - which knocked 3.78 points off the index on Wednesday.

(Additional reporting by Atul Prakash; Editing by Larry King)

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