FTSE hits one-week closing high

LONDON (Reuters) - Firmer miners helped push Britain's top share index to a one-week closing high on Tuesday on improving risk appetite, while signs of strength in Europe's banking system lifted banks.

The FTSE 100 .FTSE closed up 141.47 points, or 2.9 percent, at 4,965.00, its highest closing level since June 28, and its biggest one-day percentage rise since May 27.

The UK blue-chip index has taken a serious knock over the past two calendar weeks, shedding 7.9 percent, on investor concerns over global economic recovery.

Mining stocks dominated the FTSE 100 leader board, bouncing back after hefty falls in the previous session and against a backdrop of stronger base metals prices.

Antofagasta (ANTO.L), Kazakhmys (KAZ.L) and Xstrata (XTA.L) were the best off, jumping between 6.4 and 7.6 percent.

"Markets have been under considerable pressure over the course of the last couple of weeks, and certainly a few bargain hunters have come out to take advantage of some oversold sectors," said Henk Potts, equity strategist at Barclays Wealth.

"Risk appetite is being helped by the (China IPO) and potentially some good news for the financial sector in terms of the stress tests, which will be published later this month."

Agricultural Bank of China, the country's No 3 bank by assets, closed the books on its dual Hong Kong and Shanghai share sale and could break all IPO records by raising more than $22 billion.

French banks are likely to pass ongoing Europe-wide stress tests by regulators, European Central Bank Governing Council member Christian Noyer said on Tuesday, relieving some concerns about the health of the sector.

Banks, which were weak on Monday, provided firm support, with Barclays (BARC.L) leading the sector higher, up 5.9 percent, while Royal Bank of Scotland (RBS.L) rose 5 percent.

In macroeconomic news, the U.S. service sector grew in June for a sixth straight month but the rate of growth slowed more than expected and hit its lowest since February, according to an industry report released on Tuesday.

BP CLIMBS

BP (BP.L) rose 3.7 percent as the British oil major ruled out a share issue and on persistent talk of sovereign wealth fund interest, while its Gulf of Mexico oil slick spread to the Texas coast.

BP was also helped by an upgrade to "buy" from "hold" by RBS, with the broker saying BP's shares have fallen 100 pence per share more than its base case scenario, with its value almost halving since the oil spill started in April.

In the energy sector, Tullow Oil (TLW.L) was another strong gainer, up 4 percent, as Uganda gave conditional approval for the sale of Heritage Oil's (HOIL.L) assets there, paving the way for Tullow to start a $10 billion project to develop Uganda's oil reserves.

Britain's service sector enjoyed its strongest growth for two years over the past three months and manufacturing grew strongly, but tougher times may be ahead as firms are gloomier about the future, a survey suggested on Tuesday.

And new car registrations in Britain rose 10.8 percent in June to 195,226 vehicles, their 12th successive monthly increase, according to the Society of Motor Manufacturers and Traders. <ID:LDE6650II>

Among the mid-caps, UK infrastructure group Balfour Beatty (BALF.L), British housebuilder Persimmon (PSN.L) and Spirax-Sarco Engineering (SPX.L) rose between 2.8 and 6.5 percent after issuing upbeat trading updates, easing concerns over the stability of future corporate earnings.

(Editing by Simon Jessop)