FTSE rises, led by banks ahead of U.S. jobs data

* Banks rally; investors cheer RBS update

* Energy stocks weak, limiting FTSE 100's gains

* BA a top blue-chip riser after Q2 results

By Tricia Wright

LONDON, Nov 6 (Reuters) - Britain's top share index rose early on Friday, as gains in banks offset a retreat by energy stocks, ahead of key U.S. monthly jobs data which could give clues as to the outlook for the world's biggest economy.

At 0909 GMT, the FTSE 100 .FTSE was up 12.28 points, or 0.2 percent, at 5,137.92.

The index closed 0.4 percent higher on Thursday as the Bank of England and the European Central Bank kept interest rates steady, while data from the U.S, which showed a rise in productivity and fall in initial weekly jobless claims, also soothed investors' nerves.

"The key figure we've got out today is the non-farm payrolls, so if it doesn't live up to expectations then I think we're going to see a big dump in these markets," said Mike Lenhoff, strategist at Brewin Dolphin.

"If the figure at least matches expectations, and if it's better, we'll do okay and we should end the week on a reasonably firm note," he said.

The U.S. economy is expected to have shed 175,000 jobs in October, the 22nd month of job losses, but lower than the 263,000 cuts seen in September. Unemployment, however, is forecast to climb to 9.9 percent.

Banking stocks were in favour as investors digested a third-quarter trading statement from Royal Bank of Scotland (RBS.L), which was among the top blue-chip risers, up 2 percent.

Part-nationalised RBS made an operating loss of 1.5 billion pounds ($2.5 billion) in the third quarter as it took 3.3 billion pounds of bad debts and profits at its investment bank arm more than halved from the previous quarter. [ID:nL6671701]

Lloyds Banking Group (LLOY.L) put on 0.5 percent, buoyed by a Citigroup upgrade to "buy" from "hold", accompanied by a significant target hike, to 104 pence from 37, following the firm's withdrawal from the British government's asset protection scheme.

Positive broker sentiment also aided Barclays (BARC.L), up 0.6 percent, with JP Morgan lifting its target price on the stock. Standard Chartered (STAN.L) and HSBC (HSBA.L) added 0.4 percent and 0.3 percent, respectively.

British finance minister Alistair Darling said G20 policymakers are agreed that it is too early to pull the plug on economic life-support packages as the global recovery is still fragile. [ID:nLAG005901]

Miners enjoyed a rally against a backdrop of firmer metals prices, and bolstered by upbeat broker comment.

Antofagasta (ANTO.L), up 1.6 percent, was helped by a Citigroup upgrade to "buy", while Vedanta Resources (VED.L) put on 1.3 percent as the same broker lifted its price target for the stock.

Rio Tinto (RIO.L), Eurasian Natural Resources (ENRC.L) and Kazakhmys (KAZ.L) gained 0.6 to 0.7 percent.

ENERGY DRAIN

Weakness was seen among energy stocks in the wake of Thursday's rally, proving a drag on the FTSE 100, with BP (BP.L), BG Group (BG.L) and Tullow Oil (TLW.L) off 0.3 to 0.5 percent.

Among individual movers, British Airways (BAY.L) was a top blue chip riser, as investors welcomed second-quarter results from the airline with BofA Merrill Lynch repeating its "buy" rating on the stock. [ID:nL6071715]

Smith & Nephew (SN.L) added 1.6 percent as Europe's leading maker of replacement hips and knees beat forecasts for the third quarter as patients and governments began to resume spending on surgical procedures after cutting back during the recession.

Rentokil Initial (RTO.L), meanwhile, shed 0.7 percent as a third-quarter trading update from the pest control to parcel delivery firm failed to excite.