* FTSE 100 ends marginally positive thanks to late rally

* Miners hit by slide in China’s factory activity

* BAE Systems (LSE: BA.L – news) drops on forecast earnings decline

* Vodafone receives upgrade support

* FTSE enters area of resistance around May 2013 highs

By Alistair Smout

LONDON, Feb 20 (Reuters) – Britain’s top shares edged higher on Thursday, tracking gains in U.S. stocks but pinned back by miners after China’s factory activity dropped, while BAE Systems slid after forecasting a decline in earnings this year.

The FTSE 100 staged a late recovery, tracking Wall Street higher after strong U.S. manufacturing data.

Basic materials stocks, including miners, exerted the most downward pressure, trimming 6 points off the index after data from China reinforced concerns of a minor slowdown in the economy.

Activity in China’s factories shrank again in February, a preliminary private survey found, spooking markets across the region.

“Economic growth in China is slowing still because of tight monetary policy, and it won’t change until they ease policy,” Gerard Lane, equity strategist at Shore Capital, said.

“The pudding being eaten by the market at the moment is one that has been baking for quite a while. At the moment, China remains a negative story.”

Defence contractor BAE Systems sank 8.3 percent in brisk trade after it cautioned that continuing U.S. budget pressures could reduce earnings per share by 5-10 percent this year.

BAE systems receives 44 percent of its revenue from the United States.

“Awful headline figures from BAE Systems this morning,” said Jordan Hiscott, senior sales trader at Gekko Global Markets.

“As Western governments withdraw their military assets and needs from deployments in Iraq and Afghanistan, defence cuts could become more prevalent in the sector – this is undoubtedly being highlighted in the figures this morning.”

Trading volume in BAE stood at nearly 400 percent of its 90-day daily average, against the FTSE 100 of 112 percent.

Among gainers, Vodafone contributed nearly 12 points of support to the index with a 2.5 percent rise after Citigroup (TLO: CIT-U.TI – news) raised its target price on the stock to 290 pence from 260 pence.

The UK blue-chip index edged up 16.28 points, up 0.2 percent, to 6,812.99 points by the close, taking its rally since an early February low to around 6 percent.

This leaves the index just 0.8 percent shy of a peak hit in late January, before political and economic concerns in emerging markets took their toll on equities.

Fawad Razaqzada, technical analyst at Gain Capital (NYSE: GCAP – news) , said that, after three weeks of gains, the index was in an area of resistance in the range of 6,755, the 2007 high, and 6,865, the May 2013 high that the index nearly reached in January.

“Technically the long term trend remains bullish for the FTSE,” he said, citing support from bullish trend lines from 2009 and 2012 lows.

“But the index needs to clear that 6755/6865 range pretty soon before more buyers can be lured into the market.”