U.K. stocks up, but Essar Energy sinks

LONDON (MarketWatch) � The U.K.�s FTSE 100 finished higher on Tuesday, after better-than-expected economic data from China boosted investor sentiment.

The FTSE 100 UK:UKX �rose 0.7% to close at 5,693.9.

London�s blue-chip index added 0.4% in the previous session, as investors responded to a successful debt auction in France.

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Gross domestic product in China between October and December rose 8.9% compared with the same period in 2010, according to data released by the National Bureau of Statistics. The figure represented a marked slowdown in growth versus the previous quarter, but beat the 8.6% consensus estimate generated by a Dow Jones Newswires poll of economists. China growth cools, easing seen as likely

�The China data set the scene [on the FTSE 100],� said Keith Bowman, equities analyst at Hargreaves Lansdown PLC. �Speculation of a hard landing for China�s economy had been a major factor in the background, but while there has been a slowing, the figures bode reasonably well.�

Investors also digested positive economic news from Europe. An earlier auction of Treasury bills saw borrowing costs fall in Spain, while a gauge of economic sentiment jumped to a six-month high in Germany.

Mining stocks moved up, led by Rio Tinto PLC UK:RIO �. Shares in the index heavyweight climbed 2.9% after it released its fourth-quarter operations review. In a statement, the company�s chief executive said it had been �another record-breaking year� for the firm.

Fresnillo PLC UK:FRES �also advanced, gaining 2.7% and Glencore International PLC UK:GLEN �rose 2.2%. BHP Billiton PLC UK:BLT �BHP �finished up 2%.

In contrast, Xstrata PLC UK:XTA �slid 0.8%, after Morgan Stanley cut its rating on the stock to equalweight from overweight. Morgan Stanley said it made the change after revising its commodity price forecasts.

Royal Bank of Scotland Group PLC UK:RBS �RBS �posted a gain of 1.8%. The bank announced the sale of its Aviation Capital division to a Japanese consortium for $7.3 billion.

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HSBC Holdings PLC UK:HSBA �was also up, tacking on 1.9%, while Lloyds Banking Group PLC UK:LLOY �LYG �and Standard Chartered PLC UK:STAN �both advanced 0.3%.

Retailer Kingfisher PLC UK:KGF �recovered from a loss in the previous session, adding 1.9%. In the same sector, High Street chain Marks & Spencer Group PLC UK:MKS �increased 1.4% and Next PLC UK:NXT �gained 0.8%.

Luxury retailer Burberry Group PLC UK:BRBY �released a trading update. In a statement, Burberry said its quarterly revenue grew 21% year-on year, while like-for-like sales jumped 13%. Shares in the firm rose just 0.1%.

India-focused energy company Essar Energy PLC UK:ESSR �was the day�s biggest decliner in the FTSE 100. Shares in the firm�slumped 26.3% in London after it said that India�s Supreme Court ruled that its subsidiary Essar Oil can no longer pay sales tax to the government in deferred installments. Essar said it has benefited from $1.24 billion in deferred sales taxes, adding that it will provide more information after studying the court�s judgment.

Some financial services firms pulled back, with Man Group PLC UK:EMG �leading the downward trend. Man Group shares dropped 2.9% and ICAP PLC UK:IAP �posted a 1.8% loss.