* FTSE 100 up 0.3 pct at 5,884.12 pts
* Chinese stimulus speculation boosts miners
* Index capped below 5,900 on U.S., Spanish fiscal concerns
By Francesco Canepa
LONDON, Dec 5 British blue-chips made small
gains on Wednesday as speculation about growth-boosting policies
in China lifted commodity-related stocks, but sentiment was
capped by concerns on the European and U.S. economies.
Industrial metals stocks rose 2.4 percent and miners added
2.1 and the copper price hit a seven-week high after the
chief of the Chinese Communist Party said the world's largest
consumer of metals will make policies more targeted to help the
economic recovery. .
At 1138 GMT, Britain's FTSE 100 index was up 14.91
points, or 0.3 percent at 5,884.25 points, with miners adding 13
points to the index, and 7 of the top 11 gainers coming from the
Traders were monitoring a UK budget update at 1230 GMT from
finance minister George Osborne but they said the speech was
unlikely to have a significant impact on the FTSE, assuming most
measures have already been announced or leaked.
"I wouldn't be surprised if we had a quick 50-60 point move
on the FTSE next week because (stimulus measures are announced)
in China," said Dan Reed, a trader at HB Markets.
Barring any announcement in China, however, Reed expected
more range-bound trading in the days ahead and had opened a
short position on the FTSE at 5,900 points, with 5,850 as a new
The FTSE has failed to push above resistance at 5,900 three
times in the past week, in a sign appetite for equities is
capped as investors fret about fiscal negotiations in the United
States and Spain's ongoing debt issues.
U.S. legislators are discussing a deal to avoid a $600
billion package of tax hikes and federal spending cuts that
would begin Jan. 1 and could push the world's largest economy
HB's Reed expected an agreement to be reached by the end of
the year, likely pushing the FTSE above 5,900 and close to
6,000, but he warned there was a risk the index would dip as
negotiations get closer to the deadline.
Also erasing some early gains on the FTSE on Wednesday was a
disappointing bond auction in Spain which did not manage to sell
the full amount of bonds on sale. Investors are awaiting the
Spanish government's move to trigger European Central Bank
With little progress being made on the political front and
the holiday season approaching, trading volume on the FTSE was
thin at just above 20 percent of the full-day average.
Among the few heavily-traded stocks was supermarket Tesco
, which rose 2.9 percent after unveiling a solid
third-quarter trading update and launching a strategic review of
its loss-making United States chain Fresh & Easy.
In his budget update at 1230 GMT, Osborne, who will give
details of his plans to invest 5 billion pounds ($8 billion) in
schools, science and transport projects, the government said on
"Unless he makes changes to stamp duties, which would affect
property companies, it's probably going to be a non-event," HB's
Osborne will also update official economic growth and
government borrowing forecasts, expected to show a deterioration
on both fronts, against the difficult backdrop of falling
construction activity and weak retail sales.
"The chancellor will probably miss his target of expecting
net debt to fall relative to output in FY 2015/16," Rob Wood,
chief UK economist at Berenberg, said.
"One thing to watch is whether the Chancellor uses his raid
on the interest accumulating on the BoE's gilt holdings to
flatter the figures. If he does, the forecasts will lose a chunk
(Additional Reporting By Alistair Smout; editing by Stephen