Britain's FTSE 100 edges up, charts point to a pullback

* FTSE up 4.93 points * Miners up, ENRC, Vedanta boosted by bullish CS note * Yield and easing Europe risk lift financials * Oils fall as Nomura warns on outlook By David Brett LONDON, Jan 14 (Reuters) - Britain's blue chip shares inched higher on Monday helped by banks and mining stocks, though the market looked set to pull back as charts showed it was overbought after gains since the start of the year. London's blue chip index was up 4.93 points, or 0.1 percent at 6,126.51 by 0859 GMT, having added more than 2 percent since the start of 2013. Weekly inflows into equity funds hit a five-year high during the first full week of January, according to EPFR Global, with European equity funds enjoying brisk inflows as support for the financial system from central banks, an easing of euro zone debt risks and a U.S. budget deal fuelled appetite for equities. However, the FTSE 100 is trading at its highest levels in four-and-a-half years and its 14-day relative strength index (RSI) has risen to overbought territory at 70.4, a signal that the market is ripe for a pull-back in the short term. "Key resistance is seen around the 6,135 level, followed by an important one near the 6,200 level. It would be now important to watch whether the FTSE is able to stabilise above the 6,200 level or not," Atif Latif, director at Guardian Stockbrokers, said. "If the index fails to follow up through the upside, it might retest the 6,000 level, a break below which would pave the way towards the 5,989 region," he said. In a quiet session with no important economic data due most of the major market movers were guided by broker comment. Miners were on the rise with Eurasian Natural Resources the top gainer, up 1.6 percent and helped by an upgrade by Credit Suisse to "outperform" from "neutral". Vedanta (VED) followed closely, up 1.3 percent as Credit Suisse reinstated an "outperform" rating on the miner. "With improving margins, there are a number of deleveraging stories within the mining space and we see VED as potentially the most powerful stock on this theme," Credit Suisse said in a note. The search for yield remains a strong theme for 2013 and investors continue to tuck into insurers. Barclays said in a note that while the sector is at fair value with an 8.5 percent total 12-month return, positive earnings and dividend revisions and strong solvency will yet again be the key drivers to outperformance. Expectations of dividend forecasts being raised in 2013 and the risks associated with the euro zone debt crisis easing at least for now continue to underpin the rally in banks , with Lloyds Banking Group up 1.6 percent. Integrated oils, which were among the previous trading day's biggest risers, retreated as Nomura warned the sector was inexpensive for a reason and attractive price-to-earnings or dividend yields masked high breakeven oil prices. The sector trades on a forward 12-month PE of 8.5 times, compared with the FTSE 100 on 11.2 times, with a dividend yield of 4.2 percent, according to Thomson Reuters data. "If headline production continues to be used as a proxy for cash flow for European Big Oil, we see no positive inflection point during 1H 2013," Nomura said in a note. "The industry remains in a transition phase, as it builds out long-life low-decline barrels. This takes time and money and rather than being a multi-year, we warn this is a multi-decade process," it said. Accountancy software firm Sage Group was the top faller, sliding 1.7 percent, after Barclays cut its recommendation on the company to "underweight" from "equalweight". (Editing by Susan Fenton)