Britain's FTSE 100 index ended flat in a choppy market on Tuesday, recovering from earlier losses as firmer metal prices pulled miners out from the red and on a brighter mood among US consumers.
Mining shares rebounded in the afternoon session as US copper futures edged higher and a rise in oil prices helped lift gold but dealers were cautious ahead of the Federal Reserve's two-day rate-setting policy meeting which may determine the course of interest rates and direction of the precious metal. BHP Billiton, Xstrata, Rio Tinto and Vedanta Resources tacked on between 1.2 and 2.8 percent.
The FTSE closed up 2.1 points, or 0.03 percent at 6,242, but underperformed major European markets as declines in UK financial stocks weighed on the index.
"We have the highest US confidence figures in nearly five years. The market as a whole has been perhaps slightly buoyed by that," said Tim Hughes, head of sales trading at IG Index.
US consumers' mood brightened slightly in January on a more favourable view of the labour market, the Confidence Board's survey showed. But others were less optimistic about the FTSE 100. "We're not overly confident in the shorter term. The market is pretty much capped at 6,300 and we're unlikely to break above that. We are more likely heading towards the 6,000 level," said David Scott of Redmayne-Bentley.
"The US fourth quarter reporting season will highlight the fact that things are slowing down. We had such a good run of late. From the earnings perspective anyway, things are going to be more pedestrian going forward in the next few years."
Royal Dutch Shell and BG Group also featured on the upside as crude prices climbed more than a dollar to above $55 a barrel. But BP was off 0.3 percent. Vodafone, however, weighed on the index, shedding 1.3 percent ahead of its performance data on Wednesday as some investors were concerned that the numbers may not be as strong as previously expected, traders said.
"It's absolutely key after what we saw happened to Deutsche Telekom on Monday unless they (Vodafone) see their way clear to having access to emerging markets to expand their subscribers, the market is becoming saturated," said David Buik of Cantor Index. Vodafone is one of the candidates in the running to buy a controlling stake in Indian mobile operator Hutchison Essar, which has been valued at as much as $20 billion.
British Airways climbed 1.7 percent, adding on to its gains after narrowly averting a costly 48-hour strike by cabin crew members on Monday, reaching a last-minute deal with its largest union in return for new working conditions. The stock was also lifted by the performance of Air France-KLM, whose shares gained 7 percent after it steered clear of a bid for Italy's Alitalia.
Corus was up 0.5 percent ahead of Tuesday's start of an auction for the Anglo-Dutch steelmaker. India's Tata Steel and Brazil's Companhia Siderurgica Nacional are in the fray. Chocolate maker Cadbury Schweppes gained 1.4 percent as traders cited a resurgence of recent bid rumours. Talk that Kraft Foods may have an interest in the UK chocolate maker has been stoked by expectations that Altria will reach its final decision on its spin-off of Kraft at a board meeting due on Wednesday.
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