* 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
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
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.
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,
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)