* FTSE 100 index up 0.1 percent, holds above 6,100 level
* Rio Tinto weak on CEO departure, massive write-downs
* Banks rally ahead of further earnings from U.S. peers
* AB Foods in demand as Primark sales jump
* Home Retail leaps after upping profit expectations
By Jon Hopkins
LONDON, Jan 17 Britain's top shares ticked
higher on Thursday but gains were limited by a drop in mining
heavyweight Rio Tinto on shock news that its CEO is to
quit and its 2012 results will be hit by a massive charge.
Rio Tinto fell 2.8 percent, alone chopping nearly 5
points off the FTSE 100 index, as the global miner said
its chief executive Tom Albanese would step down, to be replaced
by Iron Ore unit Chief Executive Sam Walsh. The firm also said
it would take a $14 billion non-cash impairment charge in its
2012 results due to problems in Mozambique and aluminium assets.
Volume in Rio shares was at almost 100 percent of its 90-day
daily average in the first hour of trading, way above the index
total of about 10 percent.
Liberum Capital nevertheless reiterated its "buy" rating on
"Rio appears to be taking the front foot on write downs and
appears to have been more proactive on culpability - launching
management changes and cost cutting before the market has asked
for it," Liberum said in a note.
"Sam Walsh is the logical replacement for Albanese and has a
strong operational heritage and may be more focussed on iron ore
growth, which the market will like."
The miners' overall fall of 1.3 percent knocked
more than 8 points off the FTSE 100 index, the sector extending
declines from the previous session as investors cautiously await
GDP data due on Friday from top metals consumer China.
But the blue chip index managed to tick higher thanks to a
rally in the banking sector, up 0.8 percent
following recent declines, with investors awaiting more Q4
earnings from their U.S. peers.
Citigroup and Bank of America Corp. are
scheduled to post numbers on Thursday, after both JPMorgan Chase
and Goldman Sachs beat forecasts on Wednesday.
"We are continuing to consolidate the strong New Year gains
as we wait for fresh direction from corporate earnings. The
initial news, especially from the U.S. banks has been good, but
there is still much more to come and investors don't want to get
carried away," said Mike Mason, senior trader at Sucden
Financial Private Clients.
At 0907 GMT, the UK blue chip index was up 4.91 points, or
0.1 percent at 6,108.89, holding above the key 6,100 level after
falling 0.2 percent on Wednesday.
The blue chip index has gained around 3.5 percent since the
start of 2013.
HIGH STREET FOCUS
Associated British Foods was the biggest FTSE 100
riser, up 4.4 percent after it said group revenue in the 16
weeks to January 5 was 10 percent ahead of last year, driven by
a higher-than-expected 25 percent increase in sales at high
street clothing retailer Primark.
There was also good news on the high street from Home Retail
Group. Britain's biggest household goods retailer
topped the FTSE 250 leader board with a 13 percent leap
as it raised its full-year profit expectations after posting a
2.7 percent rise in third quarter sales at its Argos business.
Bank of America Merrill Lynch increased its 2013 and 2014
pretax profit forecasts for Home Retail by 7-8 percent, raised
its target price to 155 pence from 130 pence, It repeated its
"buy" rating, noting that Home Retail remains one of the more
shorted stocks in the sector and had 12 broker "sell" ratings.
Seymour Pierce, however, trimmed that number by upgrading
its rating for Home Retail to "hold" from "sell".
Volume in Home Retail shares was nearly one-and-a-half times
its 90-day daily average in the first-hour of trade.
Elsewhere on the high street, Europe's second-biggest
electrical goods retailer Dixons Retail fell 0.9
percent, and British baby and maternity products retailer
Mothercare shed 3.7 percent, as Christmas sales updates
(Reporting by Jon Hopkins)