* FTSE 100 steady
* Miners hit by slide in China's factory activity
* BAE Systems drops on forecast earnings decline
* Vodafone receives upgrade support
* FTSE approaches area of resistance around May 2013 highs
By Alistair Smout
LONDON, Feb 20 Britain's top shares steadied on
Thursday, pinned back by miners after a survey showed a drop in
China's factory activity, while BAE Systems slid after
forecasting a decline in earnings this year.
However, the FTSE 100 staged a late recovery, tracking Wall
Street higher after strong U.S. manufacturing data.
Basic materials stocks, including miners, exerted the most
downward pressure, trimming 10 points off the index after data
from China reinforced concerns of a minor slowdown in the
Activity in China's factories shrank again in February, a
preliminary private survey found, spooking markets across the
"Economic growth in China is slowing still because of tight
monetary policy, and it won't change until they ease policy,"
Gerard Lane, equity strategist at Shore Capital, said.
"The pudding being eaten by the market at the moment is one
that has been baking for quite a while. At the moment, China
remains a negative story."
Defence contractor BAE Systems sank 8.3 percent in brisk
trade after it cautioned that continuing U.S. budget pressures
could reduce earnings per share by 5-10 percent this year.
BAE systems receives 44 percent of its revenue from the
"Awful headline figures from BAE Systems this morning," said
Jordan Hiscott, senior sales trader at Gekko Global Markets.
"As Western governments withdraw their military assets and
needs from deployments in Iraq and Afghanistan, defence cuts
could become more prevalent in the sector - this is undoubtedly
being highlighted in the figures this morning."
Trading volume in BAE stood at over 300 percent of its
90-day daily average, against the FTSE 100 of just 76
Among gainers, Vodafone contributed over 11 points of
support to the index with a 2.5 percent rise after Citigroup
raised its target price on the stock to 290 pence from 260
The UK blue-chip index edged up 0.15 points, flat in
percentage terms, at 6,796.96 points by 1548 GMT, taking its
rally since an early February low to around 6 percent.
This leaves the index just 0.9 percent shy of a peak hit in
late January, before political and economic concerns in emerging
markets took their toll on equities.
Fawad Razaqzada, technical analyst at Gain Capital, said
that, after three weeks of gains, the index was in an area of
resistance in the range of 6,755, the 2007 high, and 6,865, the
May 2013 high that the index nearly reached in January.
"Technically the long term trend remains bullish for the
FTSE," he said, citing support from bullish trend lines from
2009 and 2012 lows.
"But the index needs to clear that 6755/6865 range pretty
soon before more buyers can be lured into the market."