* FTSE 100 index up 0.05 percent
* Miners remain supported by China PMI data
* Wolseley weak on cautious outlook
By Jon Hopkins
LONDON, Dec 4 (Reuters) - Britain’s top shares held steady on Tuesday as gains in heavyweight miners helped offset caution over progress on discussions over the U.S. “fiscal cliff”.
The mining sector modestly extended Monday’s advance as copper held firm after upbeat manufacturing data from top metals consumer China at the weekend.
The China data outweighed concerns over the fiscal cliff, a combination of U.S. spending cuts and tax rises due to be implemented in early 2013 that could tip the world’s leading economy back into recession.
“The miners are backstopping us again but the focus still remains on the fiscal cliff negotiations in the U.S. and until these can be resolved any hoped-for Santa Rally is unlikely to gain much traction,” Andrew Crook of Sucden Financial Private Clients said.
The White House has dismissed a budget deal proposal from congressional Republicans that included tax reforms and spending cuts, saying it did not meet President Barack Obama’s pledge to raise taxes on the wealthiest Americans.
At 0907 GMT, the FTSE 100 index was up 2.85 points, or 0.1 percent at 5,874.09, stuck in a very tight trading range from 5,850 to 5,875.
The UK blue chip index closed 0.1 percent higher on Tuesday, having run back from an early session peak just above the psychologically important 5,900 level late in the session.
“Monday’s rally to 5,902.00 fell short of the previous high and the 5,871.24 close has placed the index in position to break further,”James A. Hyerczyk, analyst at Autochartist said.
“If downside momentum increases on Tuesday, traders should watch for the start of a possible break into 5,755.00 to 5,719.74.”
Plumbing and building supplies group Wolseley was a top blue chip faller, shedding 1.1 percent as a slightly cautious outlook and weak showings in continental Europe weighed against continued strong growth in North America in the first quarter.
“The Wolseley Q1 IMS looks broadly in line with consensus but with scope for some small (2-3 percent) FY estimate slippage given the outlook,” Oriel securities said in a note reiterating its “hold” rating on the stock.
Wolseley was the top traded stock in the FTSE 100, with volume at almost 40 percent of its 90-day daily average in the first hour of trading, with total index volume at 8 percent.
British retail sales edged up in November, though by less than analysts were expecting, as shoppers hunted for cheap Christmas gifts, the British Retail Consortium said on Tuesday.
Like-for-like retail sales rose by 0.4 percent in value terms on the year, after falling 0.1 percent in October, the BRC said. Economists polled by Reuters had expected a 0.9 percent rise.
Meanwhile, Britain’s economic growth in the next two years will be weaker than previously thought, held back by a global slowdown and domestic austerity measures, the British Chambers of Commerce said on Tuesday.
Food retailers were a weak sector, reflecting the dull BRC survey and some cautious broker comment, with Espirito Santo Investment Bank downgrading its ratings for both Tesco and WM.Morrison to “sell” from “neutral”.
Espirito Santo maintained its “neutral” stance on J.Sainsbury pointing out that its latest survey of 2,500 UK consumers showed Sainsbury’s positive sales momentum looking set to continue and accelerate, whilst customers’ perceptions of Tesco and Morrison have deteriorated. (Reporting by Jon Hopkins/editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)