Miners lift FTSE 100 on hopes of China stimulus

* FTSE 100 up 0.6 percent

* China stimulus prospects rise after weak data

* ARM slides on Deutsche Bank downgrade

LONDON Sept 3 (Reuters) - Miners led Britain's top share

index higher early on Monday, after weak Chinese data raised the

prospect that the world's biggest consumer of raw materials

could do more to support faltering growth in its economy.

By 0754 GMT, the FTSE 100 was up 32.73 points, or

0.6 percent, at 5,744.21, having shed 2.6 percent over the

previous eight trading days, although volumes are expected to

remain low with the U.S. stock market closed for the Labor Day

holiday.

Miners were the biggest gainers on Monday,

having underpeformed over the last five days, falling 4.1

percent compared with a 1.1 percent decline on the broader FTSE

100.

The main catalyst was expectations that China would soon act

after its vast manufacturing sector was badly hit by slowing new

orders, two complementary surveys showed.

"Some form of stimulus is likely, whether it is purely

monetary or whether they will have to think of fiscal stimulus

is an open question, because if the economy is slowing at the

pace it appears to be then it has to be all hands to the pump,"

Peter Dixon, economist at Commerzbank, said.

Miners' second-quarter earnings fell on average by 44

percent due to the decline in demand from China.

FED UP

The prospect for further stimulus to boost waning global

growth is critical for markets.

Following Federal Reserve chairman Ben Bernanke's speech on

Friday, where he left the door open for more monetary easing,

attention is now on the European Central Bank meeting this week

with expectations that president, Mario Draghi, will unveil some

form of stimulus plan.

"As ever markets are probably expecting too much from

President Draghi and his colleagues; the retreat in risk assets

in recent days has begun to recognise the potential for

disappointment," Ian Williams, equity strategist at Peel Hunt,

said.

He said the challenge for Draghi will be to provide more

details of the new framework for bond purchases without

pre-judging subsequent political and legal developments.

In a note, Societe Generale said it expected new clues, but

with final details only after a German Constitutional Court

ruling on Sept. 12 that may affect the ECB's bond-buying plans,

although a rate cut may come this week.

Among the main fallers on the FSTE were technology firms Arm

Holdings and CSR down 2.2 and 1.4 percent

respectively after Deutsche Bank cut both firms to "sell",

mainly on valuation grounds.

(Editing by Erica Billingham)

Source: http://news.yahoo.com/miners-lift-ftse-100-hopes-china-stimulus-083036434--business.html

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