* FTSE gains 0.9 percent * Oils, miners gain on improved demand * Banks recover on capital raising approvals * Talk of further rate cuts helps sentiment By Nick Vinocur LONDON, Nov 21 (Reuters) - Britain's leading share index was up 0.9 percent at midday on Friday, as talk of further interest rate cuts eased worries about the financial sector, while miners and oils gained on firmer commodity prices. By 1207 GMT the FTSE 100 .FTSE was up 34.11 points at 3,909.10, having ended down 130.69 points, or 3.3 percent, on Thursday. Wall Street futures pointed to a rebound from Thursday's rout, when a frantic flight from risk drove the Standard & Poor's 500 index to its lowest level since 1997. Expectations of further monetary policy loosening by global central banks helped bring a reprieve in the selling of financial stocks. "All the policy reactions are pretty good. If you look at Libor and some other rates, it's (interest rate cuts) having some effect, but it takes time, and we shouldn't expect instant solutions to problems that have been building for some time," said Teun Draaisma, an equities strategist at Morgan Stanley. But he warned that the fundamental outlook for equities remained bleak, with corporate earnings in a downward spiral and a global recession widely expected to keep markets depressed well into 2009. "We should stick to what we know, and the certainty is that we are in a big global depression that will last quite a bit longer," he added. Oil and mining stocks led gains on the blue chip index following a week of bruising losses in both sectors, as crude prices recovered from 3-1/2 year lows and demand for raw materials stabilised. Energy stocks gained, with BP (BP.L: Quote, Profile, Research, Stock Buzz) up 2 percent, BG Group (BG.L: Quote, Profile, Research, Stock Buzz) ahead 7.2 percent, and explorer Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) 1.5 percent higher after it reported striking oil in Ghana. Heavyweight miners also gave a boost to the index, recovering after recent sharp falls on bargain-hunting. Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz) jumped 15 percent, topping the list of FTSE 100 gainers, Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) gained 8.7 percent, BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) rose 10.5 percent, and Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz) added 10.4 percent. BANKS RECOVER U.S. giant Citigroup (C.N: Quote, Profile, Research, Stock Buzz) is considering selling itself after the recent plunge in its share price, the online edition of the Wall Street Journal said. Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) gained 3.9 percent, with its shareholders having approved plans for a government bailout on Thursday. Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), which will see its shareholders vote on capital raising plans next week, rose 4.9 percent, while HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) added 1.3 percent, and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) put on 2.1 percent. Defensive stocks, which tend to underperform in rising markets, were under pressure. Heavyweights AstraZeneca (AZN.L: Quote, Profile, Research, Stock Buzz) and GlaxoSmithKline (GSK.L: Quote, Profile, Research, Stock Buzz) slid 4.2 and 3.6 percent. National Grid (NG.L: Quote, Profile, Research, Stock Buzz) fell 3.3 percent, retreating from Thursday's gains after its well-received first-half results, as HSBC cut its rating to "neutral" from "overweight". Water group Severn Trent (SVT.L: Quote, Profile, Research, Stock Buzz) lost 4.3 percent, extending weakness from Thursday's downgrade by Merrill Lynch. Defensive tobacco stocks were out of favour, with British American Tobacco (BATS.L: Quote, Profile, Research, Stock Buzz) down 1.7 percent, and Imperial Tobacco (IMT.L: Quote, Profile, Research, Stock Buzz) off 1.4 percent. UBS cut its price target for Imperial Tobacco to 1,700 pence from 1.945. (Reporting by Nicholas Vinocur, editing by Will Waterman)

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