* FTSE 100 up 0.2 percent to 5,949.99 points
* Evraz rises after bullish Morgan Stanley note
* U.S. "fiscal cliff" uncertainty caps gains
By Sudip Kar-Gupta
LONDON, Dec 24 (Reuters) - Britain's benchmark share index edged higher on Monday, with miner Evraz among the top gainers, although traders said uncertainty over U.S. budget talks would cap any gains in the coming sessions.
The blue-chip FTSE 100 index was up by 0.2 percent, or 9.90 points, at 5,949.99 points in early morning trade, recovering from two sessions of minor losses at the end of last week.
Volumes were expected to be thin, with the London market due to close early for the Christmas holiday.
Russian-focused group Evraz rose 0.6 percent after investment bank Morgan Stanley highlighted it as one of its main "stocks to watch in 2013", writing in a research note that Evraz could benefit from growth in the Russian construction market.
"Evraz is the Russian steelmaker with the largest domestic exposure to 'long steel', therefore the most levered to a strong domestic construction market," Morgan Stanley wrote in its note.
The FTSE 100 has risen by around 7 percent this year.
However, the march higher has stalled this month due to uncertainty over U.S. policymakers ability to avoid a "fiscal cliff" of government spending cuts and tax hikes due to take effect early next year, which could drive the world's economy back into recession.
Although most investors expect a deal on the budget to be struck eventually, signs of delays or hurdles have dented equity markets, with falls often exacerbated since volumes have been thin during the Christmas holiday period.
On Sunday, some U.S. lawmakers voiced concern that a deal may not be reached.
Richard Curr, head of dealing at British broker Prime Markets, said the FTSE 100 could reach the 6,000 point mark - seen as key for triggering further gains - but only if a deal on the fiscal cliff was reached.
But he did not see substantial losses if Republicans and President Barack Obama fail to find a consensus next week, judging that officials would find a way of dealing with the fallout early next year.
Curr said the FTSE 100 would likely trade within the 5,900 to 5,977 point range in the absence of any progress by the end of 2012, but added that investors still expected more gains in the UK stock market next year.
Many investors have favoured equities over other asset classes such as cash or bonds, with shares offering higher yields via their dividend payouts, while returns on cash and sovereign bonds have been hit by low interest rates.
"Everyone seems quite bullish about 2013," he said. (Reporting by Sudip Kar-Gupta; editing by Patrick Graham)