* FTSE 100 up 0.5 pct
* BT and mining stocks rise
* Majority of investors remain bullish on FTSE long-term prospects
By Sudip Kar-Gupta
LONDON, Feb 1 A rise in telecoms group BT and mining stocks drove Britain's benchmark share index higher on Friday, pushing the market back to within reach of its highest level in four and a half years.
The blue-chip FTSE 100 index was up by 0.5 percent, or 30.84 points higher, at 6,307.72 points -- pushing it back to near its best level since around mid-2008.
The market had fallen 0.7 percent on Thursday, but BT led the FTSE 100's recovery, rising 4.1 percent to add the most points to the index after BT reported better-than-expected profits.
"BT has achieved much in turning around what had been a flailing former monopoly," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
Berkeley Futures associate director Richard Griffiths said some investors were buying FTSE 100 "put" options -- which gives the right to sell an index at a set price in the future -- which had strike prices of 6,100 points for a mid-February expiry.
This implied a potential 200 point drop in the market over the next two weeks, but Griffiths said the majority of investors remained bullish on the longer-term prospects for the market, with many looking to buy stocks on the dip when the FTSE fell.
"We've had a good run and some people are expecting a bit of a near-term correction. But it's very evident that people are still buying on the dip," he said.
Mining stocks also rose after new signs of economic growth in China, the world's biggest consumer of metals, with the FTSE 350 mining index advancing by 1.2 percent.
Colin McLean, managing director at SVM Asset Management, said some traders were switching out of bank stocks, with European lenders hit by weak results at the likes of Credit Agricole and Deutsche Bank, and into miners.
"The banks have had a good run, and investors are looking at the bigger mining stocks," said McLean.
McLean added the FTSE 100 could reach the 6,800 point level by mid-2013, helped partly by investors moving out of bonds and cash into equities, due to the higher returns on offer through stocks' dividend payouts.
"I think the market can still go higher," he said. (Reporting by Sudip Kar-Gupta; additional reporting by David Brett/editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)