FTSE up 0.5 pct; banks lead, Bernanke boost

* Bernanke says U.S. interest rates to stay low

* Banks higher ahead of RBS and Lloyds results

* Oils rise; Crude gains as dollar slips

By David Brett

LONDON, Feb 24 (Reuters) - Britain's top shares rose 0.5 percent on Wednesday, led by banks and echoing gains on Wall Street as U.S. Federal Reserve chairman Ben Bernanke assuaged fears of an earlier than expected interest rate rise.

The FTSE 100 .FTSE ended 27.83 points higher at 5,342.92 buoyed by the Fed chairman's statement and after it had closed 0.7 percent lower the previous session.

Bernanke began delivering his congressional testimony to the House of Representatives and the Senate on Wednesday. He started by telling lawmakers that he stood prepared to continue supporting the economy with extraordinary stimulus for some time. [ID:nN23149186]

"Bernanke has dismissed any fears that a vital cog in the economic global recovery mechanism will be taken away prematurely and that has boosted the confidence of investors," said Jimmy Yates, head of equities at CMC Markets.

The news immediately saw U.S. markets rally where the Dow Jones industrial average .DJI and the Standard & Poor's 500 Index .SPX added 0.8 and 0.9 percent respectively.

Banks were the biggest gainers on the FTSE 100 as investors tucked in ahead of results from Royal Bank of Scotland (RBS.L) (RBS) on Thursday and Lloyds Banking Group (LLOY.L) on Friday.

RBS and Lloyds added 0.4 and 3.4 percent respectively.

The UK government has approved RBS's planned bonus pool, a move the bank's executives hope will draw a line under the pay debate and help efforts to turn around its investment bank. [ID:nLDE61N1XD]

HSBC (HSBA.L) rose 2.5 percent and Standard Chartered (STAN.L) gained 1.2 percent.

Barclays (BARC.L), which beat full-year pretax profit forecasts last week, fell 0.6 percent as it traded ex-dividend.

Energy stocks were also a support for the index as crude prices rose more almost $1 to over $79 per barrel CLc1 as the dollar weakened against the euro.

BP (BP.L), Royal Dutch Shell (RDSa.L), BG Group (BG.L), Tullow Oil (TLW.L) and Cairn Energy (CNE.L) gained 0.3-1.2 percent.

MINER DRAG

Miners were a drag on the index as some uncertainty over the potential impact of China's monetary tightening remained, with Vedanta Resources (VED.L), Xstrata (XTA.L), Rio Tinto (RIO.L) and Kazakhmys (KAZ.L) losing 0.5-1.2 percent.

The sector was unsettled by news that major commodity consumer China could implement fresh measures to clamp down on excessive bank lending to temper its growth spurt. [ID:nTOE61M098]

Among individual movers, Wolseley (WOS.L) was the biggest faller on the index, retreating 3.1 percent after sharp gains the previous session after the building materials supplier issued a surprise, upbeat trading statement.

Land Securities (LAND.L) and Reckitt Benckiser Group (RB.L) dropped 1.2 and 1.5 percent respectively after losing their dividend attractions.

On the economic front, sales of newly built U.S. single-family homes unexpectedly fell to a record low in January, according to government data on Wednesday that hinted at potential trouble for the fragile housing market recovery. [ID:nN24373288] (Editing by Mike Nesbit)