Vodafone, miners help lift FTSE in early trade

* Vodafone extends recent gains

* Miners track firmer copper prices

* M&S bounces ahead of Wednesday's trading update

By Dominic Lau

LONDON, Jan 5 (Reuters) - Britain's top share index gained slightly early on Monday, extending last week's strong run, as Vodafone (VOD.L) rose while U.S. President-elect Barack Obama's plans for tax cuts also helped sentiment.

By 0902 GMT, the FTSE 100 .FTSE was up 19.65 points, or 0.4 percent, at 4,581.44 after rising 8.2 percent in a four-session winning run last week. The UK benchmark, however, suffered its worst annual drop since its launch in 1984 last year, down 31.3 percent.

Index heavyweight Vodafone put on 2.7 percent, extending recent strong run after Credit Suisse upgraded the mobile phone group to a "trading buy" on New Year's Eve.

Miners rose along with firmer copper prices, with BHP Billiton (BLT.L), Rio Tinto (RIO.L), Xstrata (XTA.L), Anglo American (AAL.L), Kazakhmys (KAZ.L) and Antofagasta (ANTO.L) up 0.1 to 3.5 percent.

"We had a bit of a bounce towards the end of the year. After all you can argue that we have quite a bit of overreaction through parts of last year," said Howard Wheeldon, senior strategist at BGC Partners. "But none of the euphoria takes away the issues that we have to face this year."

"Perhaps we are overdue this temporary bounce."

Sentiment was also boosted by news that Obama is seeking as much as $310 billion in tax cuts as part of a massive stimulus plan to tackle the financial crisis. [ID:nSP346125] Prime Minister Gordon Brown said the British government was talking to lenders about stepping up loans to credit-starved companies, but a second bailout of banks was not the preferred option. [ID:nL4395270]

Officials from the Federal Reserve and the European Central Bank on Sunday vowed to fight the damaging effect of deflation as the global economy enters a deep and possibly lengthy recession. [ID:nN04296451]

Banks were generally weaker, with HSBC (HSBA.L), Royal Bank of Scotland (RBS.L), Lloyds TBS (LLOY.L) and HBOS HBOS.L down. But Standard Chartered (STAN.L) and Barclays (BARC.L) headed higher.

Deutsche Bank said in a note that it had cut its 2009 EPS forecasts for Barclays, HSBC, RBS and StanChart by 12 to 72 percent.

"We are sellers of Lloyds TSB and see greater risks around HSBC and RBS of our holds. Barclays is our only buy," it said.

"We see higher than expected loan losses as the key sector downside risk. Key upside risks relate to a sharp improvement in sector sentiment driven by a resumption of corporate lending volumes, likely linked to government assistance."

Marks & Spencer (MKS.L) rose 3.9 percent ahead of Wednesday's trading update.

Within the sector, Next (NXT.L) put on 1.4 percent and Home Retail (HOME.L) added 2.1 percent. (Editing by Hans Peters)