After a morning session in the red, UK stocks erased losses in afternoon trading after some better-than-expected data Stateside helped the outlook for the world's largest economy. Leading the rise on the Footsie were the miners after some M&A rumours bolstered gains.

Nevertheless, analysts at Digital Look are warning not to get too excited after the recent string of gains until the FTSE 100 breaks through technical resistance at 5,850 points clearly.

US initial jobless claims fell by 12,000 last week to 367,000, the Department of Labor said today, in a sign that the labour market may be slowly recovering. Expectations were for a reading of 371,000. Barclays Capital (BarCap) analyst Peter Newland said: "the consistent downward trend in initial claims points to a gradually improving labour market.

Chinese Premier Wen Jiabao is considering increasing Beijing's involvement in the Eurozone's rescue fund, he told reporters in a media briefing with German Chancellor Angela Merkel. according to Reuters. He did not make any explicit commitments, however.

Of interest as well, remarks from Bank of England policy-maker Adam Posen on Bloomberg TV to the effect that he is, "certainly leaning toward -- but who knows -- doing more QE if we don't change the forecast," although he did add that he is, "slightly more optimistic than I was a few months ago."

Meanwhile, Greece's deal with private creditors is said to be only hours away. According to a Wall Street Journal (WSJ) report, people close to the negotiations say that only small differences remain so the agreement could be concluded "in hours".

The main delay however is, according to the paper, "the rift between the IMF and Germany". According to the Fund, cutting the €200bn in Greek debt simply won't do the job of getting Athens's debt down to 120% of gross domestic product by 2020. The IMF thinks it's necessary for the "official sector", such as the European Central Bank (ECB), to also swallow losses on its own Greek bond holdings.

M&A ACTIVITY BOOSTS MINERS

Confirmation of a merger between Swiss commodities giants Glencore and Xstrata sent the two stocks to the top of the pile today, with Xstrata jumping 10% and Glencore rising 7%. A merger of mining outfit Xstrata and commodities trader Glencore could create a leviathan valued at around £52bn.

Chris Searle, corporate finance partner at BDO LLP, said that this was no real surprise given that Glencore already owns a substantial stake in Xstrata. "Whether this merger triggers another round of consolidation in the industry remains to be seen, given anti-trust concerns around the world, but other companies may feel forced to merge just to keep up with this new giant," he said. Sector peers Vedanta Resources, Antofagasta and Anglo American were also making decent gains.

Another reason for the strength in the mining sector today could be that, according to a report in South African newspaper Business Day, the country's ruling ANC government has decided that the nationalisation of mines would be unconstitutional and too expensive, Bloomberg writes. Not coincidentally, some industry executives warned of such risks at the recent World Economic Forum in Davos.

However, not all miners joined in with the rise, with Eurasian Natural Resources Corp (ENRC) in the red as the markets were perhaps pricing in Glencore buying Kazakhmy's stake in ENRC.

Also on the rise was medical devices maker Smith and Nephew. Fourth quarter sales came in a touch shy of market expectations, but showed a modest improvement on the previous year's fourth quarter figure.

BIG HITTERS DISAPPOINT

Shares in consumer goods giant Unilever were left on the shelf after the Anglo-Dutch company reported revenues below expectations and expressed worries over input costs and the global economy.

Drugs giant AstraZeneca took a hit after the company lowered its forecast for revenue contribution from recently launched and pipeline products. Astra also warned that both revenues and earnings will decline in 2012 due to government interventions on pricing and ongoing generic competition. The company also revealed 7,300 job cuts in order to "enhance productivity" and reduce costs.

Anglo-Dutch integrated oil behemoth Royal Dutch Shell fell after underlying fourth quarter earnings came in below expectations. Net income on a current cost of supplies (CCS) basis, excluding various exceptional items such as gains from divestments and fair value accounting adjustments, rose to $4.8bn from $3.1bn the year before, but were below the $5.2bn the market was expecting.

ARM Holdings was among the worst performers with market chatter pointing to the possibility that should equity markets perk up then the chip designer may lose some of its 'safe-haven' appeal.

The same could be said for the defensive utilities sector, with stocks such as Severn Trent, United Utilities, National Grid and SSE falling late on.

BC

FTSE 100 - Risers
Xstrata (XTA) 1,230.50p +9.92%
Glencore International (GLEN) 461.70p +6.94%
Vedanta Resources (VED) 1,323.00p +5.76%
ICAP (IAP) 381.30p +5.33%
Smith & Nephew (SN.) 640.00p +4.49%
Man Group (EMG) 126.80p +4.19%
Anglo American (AAL) 2,830.50p +3.57%
Admiral Group (ADM) 962.00p +3.11%
Johnson Matthey (JMAT) 2,226.00p +3.10%
Petrofac Ltd. (PFC) 1,495.00p +3.10%

FTSE 100 - Fallers
Unilever (ULVR) 1,994.00p -4.36%
Severn Trent (SVT) 1,501.00p -3.60%
AstraZeneca (AZN) 2,984.00p -3.41%
ARM Holdings (ARM) 577.00p -2.62%
United Utilities Group (UU.) 594.50p -2.38%
GlaxoSmithKline (GSK) 1,396.00p -2.00%
Sainsbury (J) (SBRY) 288.70p -1.80%
Eurasian Natural Resources Corp. (ENRC) 705.00p -1.74%
Cairn Energy (CNE) 287.00p -1.71%
National Grid (NG.) 625.00p -1.42%

FTSE 250 - Risers
Shanks Group (SKS) 113.00p +13.17%
Ocado Group (OCDO) 109.50p +11.56%
ITE Group (ITE) 230.00p +11.16%
Hays (HAS) 79.95p +7.89%
Spirent Communications (SPT) 130.20p +7.87%
Afren (AFR) 132.40p +6.95%
New World Resources A Shares (NWR) 494.00p +6.81%
Cape (CIU) 424.80p +5.94%
International Personal Finance (IPF) 203.90p +4.78%
SVG Capital (SVI) 230.00p +4.07%

FTSE 250 - Fallers
Diploma (DPLM) 401.40p -5.66%
Unite Group (UTG) 180.20p -4.45%
WH Smith (SMWH) 537.00p -3.94%
FirstGroup (FGP) 306.00p -3.32%
Elementis (ELM) 156.00p -3.17%
Senior (SNR) 182.30p -3.08%
Cable & Wireless Communications (CWC) 43.50p -2.99%
Stagecoach Group (SGC) 279.90p -2.61%
Heritage Oil (HOIL) 192.50p -2.33%
Perform Group (PER) 252.10p -2.17%

Related share prices
Anglo American (AAL) share price
AstraZeneca (AZN) share price
SSE (SSE) share price
Severn Trent (SVT) share price
Unilever (ULVR) share price
United Utilities Group (UU.) share price
ARM Holdings (ARM) share price
Smith & Nephew (SN.) share price
Antofagasta (ANTO) share price
Xstrata (XTA) share price
National Grid (NG.) share price
Vedanta Resources (VED) share price
Kazakhmys (KAZ) share price
Royal Dutch Shell 'A' (RDSA) share price
Royal Dutch Shell 'B' (RDSB) share price
Eurasian Natural Resources Corp. (ENRC) share price
Glencore International (GLEN) share price