Miners fuel FTSE gains after China boost

THE FTSE 100 was up this morning as better-than-expected economic data from China offset the damage caused to investor sentiment by S&P's downgrade of the Eurozone's rescue fund.

China's gross domestic product grew at an annual rate of 8.9 per cent from 9.1 per cent in the previous quarter, beating expectations for a 8.7 per cent rise.

Mining stocks rose in London as the data eased concerns over demand for copper, of which China is the world's largest consumer.

Concerns over the Eurozone's debt crisis will never be far from investors' minds after Standard & Poor's cut its credit rating of the area's EFSF rescue fund late on Monday, while Greece was under pressure to break a deadlock in debt swap talks if it is to avoid an unruly default.

Meanwhile domestic data showed that the UK consumer prices index fell from 4.8 per cent in November to 4.2 per cent in December, as inflation continues to edge down.

RBS was the highest climber on the blue chip index, rising 3.8 per cent after announcing that it had sold its aircraft leasing business to Japanese banking group Sumitomo Mitsui for £4.7bn.

Insurance buyout vehicle Resolution was up 3.3 per cent after UBS upgraded the firm to "buy" from "neutral" on valuation grounds, in a note on the UK life and non-life insurance sectors.

The other three top performers were resource and engineering stocks, buoyed by the data from China.

Engineer GKN was up just over three per cent while miners Vedanta and Kazakhmys nudged up by 2.8 per cent as the sector performed strongly.

Lloyds was up 2.3 per cent as the banking sector weathered the latest Eurozone storm relatively well.

FTSE 250-listed Dixons rose by six per cent after a trading update which showed sales improving in recent weeks.

On the negative side Burberry the biggest loser, down 2.1 per cent despite reporting a sales rise fuelled by growing custom in China. It was hit by slowing sales in the US.

The shares were also pressured by a note from Bank of America Merrill Lynch which downgraded the European luxury goods sector to "underweight" from "neutral" on valuation grounds, but kept its "neutral" stance on Burberry.

The world's largest caterer, Compass Group was down 0.5 per cent along with credit data giant Experian, outsourcing company Serco and Imperial Tobacco.

Cruise ship giant Carnival, which plunged by 16 per cent yesterday after its boat the Costa Concordia sank, lost a further 0.4 per cent.

In Asia the Nikkei closed up around one per cent and the Hang Seng 1.3 per cent.

Across the Atlantic, after the long holiday weekend, January's Empire State index is due for release.