FTSE gains as China data brightens demand outlook

* FTSE 100 up 0.8 percent

* Miners gain on Chinese data

* Banks up on improved risk appetite

* Sainsbury and International Power rise on firm results

By Simon Falush

LONDON, Nov 11 (Reuters) - Britain's top share index gained 0.8 percent early on Wednesday, as optimism on the prospects for demand was lifted by data showing a surge in China's factory output, pushing metal prices higher and boosting miners.

By 0859 GMT the FTSE 100 .FTSE was 39.43 points higher at 5,269.68, hitting a two-week high, after it closed 0.1 percent lower on Tuesday, ending a four-session winning run.

Data showing China's factory output jumped to a 19-month high in October helped sustain positive sentiment on the blue-chip index which has risen 52 percent since touching a six-year trough in March.

Miners added most points to the index with Rio Tinto (RIO.L), Xstrata (XTA.L), Lonmin (LMI.L), Anglo American (AAL.L), Kazakhmys (KAZ.L) and Fresnillo (FRES.L) gaining 2.5-3.6 percent.

"All the factors that have been lifting equities are still in place," said Lars Kreckel, equity strategist at Exane BNP Paribas. "There is extremely loose monetary policy, macro data is improving and we still have the potential for fund flows back into equities and, until this changes, there's no reason for a pull-back in equities."

Investor focus was on the Bank of England's quarterly inflation report, due at 1030 GMT, which will contain the central bank's latest growth and inflation forecasts.

Analysts will be looking for clues on the role played by these in the BoE's decision to extend its quantitative easing programme by 25 billion pounds ($42 billion) this month.

Ahead of that, British claimant count unemployment for October and the ILO jobless rate for September, both due at 0930 GMT, will also be analysed for clues on the outlook for monetary policy and how quickly the economy is recovering.

BANKS, SAINSBURY UP