4 Min Read
* FTSE 100 index gains 0.1 percent
* Rumours Verizon may buy out joint venture lift Vodafone
* Technical resistance seen around 6,100
* Banks and retailers among fallers
By Alistair Smout
LONDON, Jan 8 (Reuters) - Britain's FTSE edged up in early trade on Tuesday, consolidating a strong opening to the year before the start of the corporate earnings season, with Vodafone lifting the index into positive territory.
All eyes are on Alcoa, which reports the first major fourth quarter results after European markets close today.
"After the run we've had, people will be looking to sit on the sidelines, until we get a clearer picture and we see what U.S. earnings look like," Mike McCudden, head of retail derivatives at Interactive Investor, said. He expressed optimism that the index would soon test the 6,100 level.
By 0911 GMT, the index was up 8.19 points, or 0.1 percent, at 6,072.77, having posted its first loss of the year last session.
Hauling the index into positive territory was heavily-weighted Vodafone, which gained 2.9 percent after the Wall Street Journal reported that U.S. telecoms company Verizon could buy out Vodafone's holding in their joint venture.
Verizon's CEO said that a buy-out of Vodafone's 45 percent of Verizon Wireless(VZW) is 'feasible', the Wall Street Journal reported, with one trader saying that the only question is whether Vodafone wants to sell.
After a strong start to the year, the FTSE 100 has run up against stiff technical resistance, which, despite Tuesday's gains, was still left untested in early-session trade.
"The rally fell short of two previous tops from 2011 at 6103.00 to 6105.00. The inability to breakout over these two tops is solid proof that investors consider the market overbought and overpriced," James A. Hyerczyk, analyst at Autochartist, said in a note.
"This is a strong sign that the index could be ripe for a correction."
However, such a correction was seen as a healthy and necessary step in a sustainable upwards move.
"This market move is purely a pull-back after a strong start to the year. I have seen nothing in the economic numbers to suggest this will be prolonged," David Battersby, investment manager at Redmayne-Bentley, said.
"My mantra has always been whilst we are going to go higher it will remain volatile,"
Such volatility was demonstrated in banks, which lost 0.3 percent, having been the only major sector to gain in last session's trading after a regulatory reprieve. HSBC took the most points off the index after being cut to "hold" from "buy" by Investec.
The bank was also hit by fears that Thailand's CP Group's $9.4 billion bid to buy HSBC's stake in Ping An Insurance could be jeopardised by the state-run China Development Bank.
General retailers also lost 0.5 percent after British retailers suffered from lacklustre sales last month, a leading trade body said, with tough economic conditions limiting consumer spending in the run-up to Christmas.
The sector was also weighed down by Debenhams, with the FTSE 250 stock losing 4.8 percent after saying in a sales update that it now expects gross margin for the 2012-13 year to be 10 basis points higher than last year rather than 20 basis points previously guided. (Additional reporting by David Brett; editing by Stephen Nisbet)