FTSE edges higher on miners and retailers

By Simon Falush

LONDON (Reuters) - The top share index edged higher early on Tuesday, maintaining a six-day post-Christmas rally as miners rose on firmer metals prices but gains were slim as data highlighted the fierce headwinds facing the economy.

By 9:20 a.m. the FTSE 100 was up 18.68 points or 0.4 percent at 4,598.32, after gaining 0.4 percent on Monday and is up from a low of below 3,700 set in late October.

Embattled banks were in the red after Britain's Financial Services Authority said late on Monday that its ban on short-selling financial stocks would expire on January 16, but that it would reintroduce the ban without consultation if needed.

"To the naked eye bank shares look very cheap but of course if anyone starts digging underneath and look at the operating environment, we are going to see more non-performing loans, we are going to see more write-downs. The operating (environment) is far from positive," said Jeremy Batstone-Carr, head of private client research at Charles Stanley.

Royal Bank of Scotland, Lloyds TSB and HSBC fell between 0.2 and 2.4 percent.

The FSA also said it would extend rules requiring net short positions in financial stocks to be disclosed until June 30, although disclosure will only be required at 0.1 percent bands.

Consumer morale sank in December as worries about job losses resulting from the downturn intensified, with the Nationwide Building Society saying its confidence gauge fell to its lowest since the survey began in 2004.

The UK's largest building society also reported that house prices fell another 2.5 percent in December to make 2008 their worst-performing year on record.