* FTSE 100 up 0.1 percent, recovering from early falls
* Miners advance; Rio Tinto up on production news
* Burberry higher as trading update prompts upgrade
* ARM weak on downgrades, iPhone 5 demand concerns
By Jon Hopkins
LONDON, Jan 15 Britain's top share index was
modestly higher on Tuesday, recovering from opening falls but
staying below a 4-1/2 year peak, with investors seeking fresh
impetus to continue the new year's strong rally.
The index ticked up after data showing British consumer
price inflation held steady in December, at 2.7 percent for the
third month running, while wholesale inflation rose less than
The data confirmed a benign inflationary environment and
leaves room for possible further asset buying by the Bank of
England to stimulate a moribund economy.
At 0950 GMT, the FTSE 100 index was down 2.86
points, or 0.05 percent at 6,105.00, having shed 0.2 percent on
Monday after reaching its highest since mid-2008 early in the
session. The index is up over 2 percent since the start of 2013.
"Although the index has been grinding higher since the first
of the year, the rally seems a little laboured, suggesting
short-covering or weak buying was driving the market higher,"
Autochartist analyst James A. Hyerczyk said.
"From 6,053.60 to 6,134.17, the FTSE rallied 80.57 points in
four trading days. If the closing price reversal top at 6,134.17
is confirmed on Tuesday, then look for the start of a correction
to at least 6,093.35 to 6,082.97 by Wednesday," Hyerczyk added.
Gains by miners provided the main strength for
the blue chips, adding over 5 points to the index, as upbeat
production news from Rio Tinto buoyed the sector after
falls on Monday.
The global miner added 1.0 percent after it said it aims to
boost iron ore output by 15 percent this year as resurgent
Chinese demand drives a price recovery. Production in 2012
meanwhile climbed to 253 million tonnes, beating the firm's own
ENRC was also in demand, up 3.3 percent to extend
gains made in the previous session following a Credit Suisse
upgrade. The Daily Mail newspaper suggested the Kazakh-based
miner had also risen on Monday on speculation it had turned down
a bid approach from major shareholder Alijan Ibragimov.
Burberry Group was the top blue chip gainer, up 4.0
percent as the British luxury brand posted a 9 percent rise in
third-quarter underlying revenue. That prompted BofA Merrill
Lynch to upgrade its rating to 'buy' from 'neutral', raise its
earnings forecasts by up to 4 percent and highlight the
potential for a share buyback.
"The key good news is the recovery of retail (sales)
like-for-likes from 1 percent in the previous quarter to 6
percent in Q3," BofA ML said in a note.
"Given the concerns surrounding the brand since the profit
warning, this acceleration should support sentiment in the
Negative broker comment weighed on chip designer ARM
Holdings - the biggest FTSE 100 faller, down 4.3 percent
- with traders citing the influence of downgrades by Morgan
Stanley and Investec Securities, both made on valuation grounds.
"We see ARM as the stand-out UK Tech sector play with an
exceptional long term business outlook. However a circa 50
percent rise in three months suggests these highly compelling
attributes are better reflected in the price," Investec said in
Traders also noted that ARM shares managed modest gains on
Monday in spite of big falls by its customer Apple on
caution over demand for the iPhone 5, for which the British firm
is a supplier.
Volume in both Burberry and ARM shares were almost
three-quarters of their 90-day daily average in the first hours
of trading, with overall FTSE 100 volume at around 18 percent.
(Editing by Catherine Evans)