Miners, bank gains see FTSE sail beyond 5,000

* Miners boosted by firmer commodity prices

* Defensives weaker, tobaccos retreat

* U.S. confidence data awaited

LONDON, Sept 11 (Reuters) - Gains in miners and banks, spurred by increasing optimism about a global economic recovery, helped push Britain’s top share index up 0.8 percent, beyond the 5,000 mark by midday on Friday.

By 1101 GMT, the FTSE 100 index .FTSE was 38.72 points higher at 5,026.40, having closed 16.62 points, or 0.3 percent, lower on Thursday at 4,987.68.

The benchmark index closed above 5,000 for the first time since late September 2008 on Wednesday.

Some investors, however, expressed caution on the outlook given the extent and speed of the rally since March.

“Some people are saying ‘oh my God, I missed out on the rally I better jump in’, but the market is not looking cheap any more and the market does feel as if it’s run ahead of itself,” said Tineke Frikee, manager of the Newton Higher Income fund.

The UK blue-chip index has risen 45 percent since hitting a six-year trough in March, though it is still down 7.2 percent from its level in mid-September 2008, before the collapse of Lehman Brothers.

Improved risk appetite has helped push the dollar to a one-year low, which has lifted commodity prices, benefiting miners.

Miners were also higher after solid industrial output data from China boosted the demand outlook for metals.

Antofagasta ANTO.L, Xstrata XTA.L, Rio Tinto RIO.L, BHP Billiton BLT.L, and Anglo American AAL.L gained 1.4 to 3.4 percent.

Banks were also stronger as investors bet that they would benefit from a recovering economy.

Lloyds Banking Group LLOY.L added 1.8 percent as SG Securities assumed coverage of the bank with a "buy" rating and 160 pence target price.

Lloyds Banking Group’s Irish unit, Bank of Scotland (Ireland), wants to participate in a potential merger to create a “third force” in Irish banking, the Irish Times reported on Friday. [ID:nLB519059]

Royal Bank of Scotland RBS.L gained 1.3 percent with SG Securities assuming coverage of it with a "hold" rating and 55 pence target price, while Barclays BARC.L added 0.4 percent, and HSBC HSBA.L firmed 0.6 percent.


British hedge fund manager Man Group EMG.L was the FTSE's star performer, gaining 8.4 percent, buoyed by a Reuters report on Thursday that the company expects positive net inflows of client money for the industry as a whole by the end of 2009. [ID:nSHA309687]

Elsewhere among financials, insurer Prudential PRU.L gained 1.2 percent as the firm's chief executive-elect, Tidjane Thiam, said it would look to Asia as a source of capital and could even seek to raise equity there, according to a Financial Times report. [nLA433371]

Defensive stocks, which tend to underperform in a rising market, were a slight drag on the index.

Tobacco stocks were the biggest blue-chip fallers, giving up some gains made on Thursday following positive broker comments, with British American Tobacco BATS.L falling 1 percent. Drugs firm GlaxoSmithKline GSK.L lost 0.3 percent, while drinks group Diageo DGE.L and food producer Associated British Foods ABF.L both fell 0.5 percent, and mobile phones heavyweight Vodafone VOD.L slipped 0.2 percent.

British producer input prices rose at their fastest monthly rate in more than a year in August, driven by oil costs and pushing factory gate inflation slightly higher on the month.

Later in the session investor attention will be drawn across the Atlantic, to the University of Michigan September consumer sentiment data, U.S. import/export prices for August, wholesale inventories/sales for July, and the Federal budget for August. (Editing by Simon Jessop)