FTSE led higher by mining stocks

                                
 * FTSE climbs 0.2 pct
                                
 * Banks rally after earlier falls on Japan downgrade
                                
 * Miners firm; Randgold buoyed by HSBC upgrade
                                
 
                                
 By Tricia Wright
                                
 LONDON, Jan 27 (Reuters) - Miners helped Britain's top share
index edge higher on Thursday, boosted by firmer metals prices,
and as banks staged a slight recovery after falls earlier in the
session.
                                
 By 1223 GMT, the FTSE 100 <.FTSE> was up 10.31 points, or
0.2 percent, at 5,979.52, having added 0.9 percent in the
previous session.
                                
 Miners <.FTNMX1770> tracked metals prices higher, with
Randgold Resources <RRS.L> among the top blue-chip risers, up
4.4 percent with the extra help of an HSBC rating upgrade to
"overweight" from "neutral".
                                
 Sentiment surrounding the sector was lifted as a flurry of
production updates coincided with upbeat comments from Citi,
recommending investors re-enter the sector as mining stocks have
underperformed metal prices this year. [ID:nLDE70Q1D6]
                                
 Traders said the U.S. Federal Reserve's decision to maintain
a $600 billion bond-buying programme also helped sentiment.
                                
 "Most of the swell in asset prices, particularly from
commodities, has come from liquidity from QE2 (the second round
of quantitative easing), and the indications from the Fed last
night is that they will continue to support," said Joshua
Raymond, market strategist at City Index.
                                
 Banks <.FTNMX8350> bounced off early-session lows that were
prompted by a cut in Japan's credit rating by Standard & Poors.
                                
 "People are already buying into them and using the dips as a
buying opportunity, which shows that investors are largely
shrugging off the Japan credit rating cut," Raymond said.
                                
 
                                
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 British high street issues were out of favour after Swedish
budget fashion chain Hennes & Mauritz <HMb.ST> posted a surprise
fall in fourth-quarter profit. [ID:nLDE70O1WE]
                                
 Next <NXT.L> topped the blue-chip fallers' list, off 2.1
percent, while Marks & Spencer <MKS.L> slipped 0.6 percent.
                                
 Retailers have been unsettled by a Christmas trading period
hurt by bad weather conditions and a shock drop in British
fourth-quarter GDP, while the impact of the UK government's
austerity measures have still to be fully felt.
                                
 Elsewhere, bid target BSkyB <BSY.L> rose 1.9 percent as
strong demand for broadband lifted first-half profits at the
media firm, which analysts said will put pressure on majority
shareholder Rupert Murdoch's News Corp <NWSA.O> to lift its
offer for the group.
                                
 Satellite operator Inmarsat <ISA.L> extended the previous
session's gains, climbing 1.9 percent, as S&P Equity Research
raised its rating on the firm to "buy" from "hold", following
reports on Wednesday surrounding its deal with LightSquared.
                                
 Drugmaker AstraZeneca <AZN.L> added 1.2 percent as it
announced a $4 billion share buyback and forecast-beating fourth
quarter earnings, helped by growing sales of its cholesterol
drug Crestor and schizophrenia medicine Seroquel.
                                
 U.S. stock index futures <SPc1> <DJc1> <NDc1> pointed to a
flat to firmer start on Wall Street on Thursday, ahead of U.S.
December durable goods orders, the latest weekly jobless claims
and December pending home sales.
 (Editing by Will Waterman)