* FTSE 100 index rises 0.8 percent
* Index has risen on first day of 16 of past 18 months-BTIG
* Coutts estimates fair value at 6,550 vs current 6,266
By Toni Vorobyova
LONDON, July 1 (Reuters) - The FTSE 100 share index rose on Monday, with strong British data encouraging investors to put fresh bets on industrial and construction stocks on the first day of the new quarter.
News that Britain's manufacturing sector grew at its fastest pace in two years last month, helped boost companies such as Melrose, which added 2.4 percent, and BAE Systems, which rose 2.3 percent.
Meanwhile, building materials supplier Travis Perkins - promoted to the FTSE 100 last month - and DIY retailer Kingfisher benefited from signs of a pick-up in the housing market, with mortgage approvals at a 3-1/2 year high in May and house prices on the rise.
"We have had some reasonable figures coming out, with PMIs supporting the view that there is an improving economy ... and anything to do with the housing market is really doing very well," said Jonathan Roy, broker at London Stone Securities.
The FTSE 100 was up 50.38 points, or 0.8 percent, at 6,265.85 points by 1042 GMT, with traders saying that a 5.6 percent drop in June - its first monthly fall in over a year - had opened up some opportunities to buy stocks more cheaply.
The British benchmark has posted gains on the first day of 16 out of the last 18 months, according to research from BTIG.
Sentiment was also supported by data showing signs of stabilisation in manufacturing activity in the euro zone, Britain's top trading partner.
"Any rebound in European demand - helped by a likely weaker pound - could provide a nice boost to exporters, which dominate the FTSE 100," strategists at Coutts said in a note, also highlighting the improvements in the British economy.
"We estimate the fair value of the FTSE 100 to be 6,550 - suggesting plenty of room to grow from current levels."
Technical charts also suggested some scope for optimism on the British stock market, with the FTSE 100 holding above the 200-day moving average and breaking through resistance at the 23.6 percent Fibonacci retracement of its May 23-June 24 slump.
"It looks like we've broken above the highs of last week, which is bullish. So, in the near term, I think we are heading for 6,400," said Fawad Razaqzada, strategist at GFT Global Markets. (Editing by Pravin Char)