FTSE up as Vodafone, banks lead charge; commods dip

* FTSE 100 ends 1.6 pct higher

* Vodafone rebounds as share buyback programme announced

* Banks back in vogue as M&S talk buoys HBOS

* Falling oil prices weigh on commodity stocks

By Michael Taylor

LONDON, July 23 (Reuters) - Britain's main share index gained 1.6 percent on Wednesday as bank shares rose, led by HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), while lower U.S. crude CLc1 prices pulled oil firms down but eased inflation concerns.

The FTSE 100 .FTSE ended up 85.8 points at 5,449.9 after losing 0.7 percent on Tuesday. The blue-chip index is now down 15.5 percent so far this year.

British lender HBOS soared 16.9 percent to top the FTSE 100 gainers, lifted by market talk of bid interest from Spanish rival BBVA (BBVA.MC: Quote, Profile, Research, Stock Buzz) and a broad recovery across the financial sector, traders said. Both banks declined to comment. For more, see [ID:nL23988999]