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LONDON (Reuters) - Britain's top share index hit a two-month high on Thursday, fuelled by risk-sensitive stocks, but lagged European peers as wary investors met resistance around previous year highs.
At the close, the FTSE 100 was up 9.34 points at 5,901.42. The index's 0.2 percent rise lagged the German DAX and the pan-European FTSEurofirst 300, up 1.1 percent and 0.7 percent respectively and both posting highs for the year.
The FTSE 100 hit a two-month high at 5,923.91 but failed to sustain a move through the 5,920 level, which it has tested four times since September. Relatively low volumes suggested that investors lacked conviction to break resiliently above resistance levels.
"I think the market is still largely in wait-and-see mode," Robert Quinn, chief European equity strategist at Standard & Poor's Capital IQ, said. However, he added that apparent weakness in the growth outlook meant a good buying opportunity.
"I know everything's getting weaker, but the market is ready to take a positive spin. Occasionally people can get a bit too fundamental when they're investing. If you're thinking that the global cycle is going to trough sometime in the second quarter, then normally equities are 4-6 months ahead of those things."
Cyclicals, which are usually sensitive to sentiment about the economic outlook, were the main gainers on the index despite both copper and oil prices falling, hit by growth concerns highlighted by the ECB.
The mining sector added to the previous session's gains, led up by Antofagasta, which gained after the plans of competitor Freeport McMoran to diversify into oil and gas prompted investors to switch into more copper-focused options.
"I think the Freeport deal is helping stocks like Antofagasta, in terms of copper scarcity," Liam Fitzpatrick, analyst at Credit Suisse, said.
The materials sector contributed 7.1 points to the index, with the top five FTSE gainers all resource-related.
However, five of the six most heavily traded stocks saw falls, as the net upward move lacked conviction. Rolls-Royce traded over two-and-a-half times its 90-day average volume, compared to 88 percent for the rest of the FTSE 100, and was the index's top faller.
It lost 3.1 percent as the aerospace and defence group said it had passed information to Britain's Serious Fraud Office relating to concerns about bribery and corruption involving its intermediaries overseas.
The index failed to break out of recent ranges even as the euro zone's blue-chip Euro STOXX 50 equity index set a new 2012 high, breaching a previous resistance level around the 2,610 point level.
However, the close above 5,900 for the first time since October was seen as a bullish signal.
"Traders are watching the area between 5,900 and 5,935 with keen interest," said Fawad Razaqzada, technical analyst at GFT Global.
"This corresponds with a trend line that extends back all the way to the highs we saw in the summer of 2011. A close above here may lead to some short-side liquidation and encourage fresh buying."
Editing by Stephen Nisbet