Miners, banks pull FTSE up 0.6 pct; defensives weak

* Miners in demand; Fresnillo gains on upgrade

* Banks firmer; Bank of England decision awaited

* Defensive issues weak led by drugs, tobaccos

By Jon Hopkins

LONDON, July 9 (Reuters) - Britain's leading share index gained 0.6 percent in early trade on Thursday, snapping a three-session losing run following a late rally on Wall Street, with miners and banks providing the main strength.

By 0800 GMT, the FTSE 100 .FTSE index was 25.02 points higher at 4,163.77 after closing down 46.77 points, or 1.1 percent, on Wednesday at its lowest closing level in more than two months.

"Wall Street's late rally has given the market a bit of a boost, particularly the miners after Alcoa's results pleased, but, with news awaited from the Bank of England, overall interest is limited," said Mic Mills, senior trader at spread betters ETX Capital.

Overnight, the Dow Jones industrial average .DJI and the Nasdaq Composite .IXIC eked out gains as a late-stage rally brought stocks off their lows on hopes that the quarterly earnings season would deliver good news.

After the market close, aluminium giant Alcoa (AA.N) reported a smaller-than-expected loss that gave a positive tone to the start of the second-quarter earnings season.

Miners provided the main strength for the UK blue chips with the sector encouraged by the news from Alcoa and hopes that the corporate earnings picture could be improving.

Anglo American (AAL.L), Vedanta Resources (VED.L), Kazakhmys (KAZ.L), Antofagasta (ANTO.L), Rio Tinto (RIO.L), BHP Billiton (BLT.L) and Xstrata (XTA.L) gained between 1.4 and 4.1 percent.

All of Anglo American's leading institutional shareholders are understood to have turned down Xstrata's (XTA.L) proposed 140 billion pounds nil-premium merger of equals, The Times said.

Silver miner Fresnillo (FRES.L) was the top FTSE 100 gainer, up 6.3 percent as Citigroup upgraded its rating to "buy" from "hold".

Randgold Resurces (RRS.L), however, missed out on the sector's advance, losing 1 percent as Citigroup cut its rating to "hold" from "buy".

The Bank of England is expected to expand its 125 billion pound quantitative easing programme and keep interest rates at their record low of 0.5 percent when it announces the outcome of its latest monetary policy committee meeting at 1100 GMT.

Banking issues found good support, rallying once more following recent falls, with Royal Bank of Scotland (RBS.L), Lloyds Banking Group (LLOY.L), Barclays (BARC.L), Standard Chartered (STAN.L) and HSBC (HSBA.L) up 0.7 to 3.0 percent.

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Retailers moved higher boosted by positive comment from Citigroup, with Marks & Spencer (MKS.L) standing out, up 2.6 percent after the broker raised its rating to "buy" from "hold".

Peers Next NXT and Kingfisher (KGF.L) gained 2.3 and 1.9 percent, respectively.

A broker upgrade also gave a lift to motor insurer Admiral Group (ADML.L), up 3.9 percent, with Banc of America-Merrill Lynch hiking its stance to "buy" from "neutral".

Defensive issues were the main fallers as an element of risk appetite returned to the market, with drugs, drinks and tobaccos the worst performing sectors.

Among them, Shire (SHP.L), AstraZeneca (AZN.L), and GlaxoSmithkline (GSK.L) lost 0.4 to 1.3 percent, while Diageo (DGE.L) shed 0.9 percent and Imperial Tobacco (IMT.L) fell 0.4 percent.

Associated British Foods (ABF) (ABF.L) also suffered, losing 1.1 percent after a third-quarter trading update from the fashion retail-to-sugar producer failed to inspire.

ABF posted a 15 percent rise in third-quarter sales but held to its flat annual earnings forecast. (Editing by Simon Jessop)