* FTSE 100 gains 1.4 percent, touches highest in a month * Investors see further govt, BoE stimulus measures * Miners, oils top gainers By Simon Falush LONDON, Dec 9 (Reuters) - Britain's top share index gained 1.4 percent by midday on Tuesday, touching its highest level in a month as investors shrugged off a raft of weak data in anticipation of further growth-boosting government action. By 1119 GMT, the FTSE 100 was up 61.85 points at 4,361.91 after gaining 6.2 percent on Monday, reaching its highest level since Nov 11 though still down 32.4 percent this year. Energy stocks added most points to the index, as fears about the outlook for demand easing somewhat, with crude stabilising at around $43 per barrel. BP, Royal Dutch Shell, Cairn Energy and BG Group added between 2 and 4.4 percent. British industrial output fell at its sharpest pace in nearly six years in October and revisions to the previous month's data could mean the economy shrank even faster in the third quarter than originally thought. But investors said the ailing health of the economy will force the Bank of England to cut rates further, and the government to increase spending once again. "Markets have come down a long way, so expectations are very low," said Grahame Exton, investment director at Tilney Fund Management. "The data reinforces a view that there will be more reflationary measures and more rate cuts, so people are looking through the bad news as a forerunner to more good news." The BoE cut the base rate by 100 basis points to 2 percent last week, bringing it to its lowest level since 1951, and indicated that more might need to be done to prevent a prolonged recession. Exton added that low rates were forcing fund managers with relatively large cash positions to look at reinvesting assets in equities. British house sales fell to a record low and prices fell sharply, though at a slightly lower pace, the Royal Institution of Chartered Surveyors said. Banks, many of which are heavily exposed to the UK property market, were mixed. HBOS, Royal Bank of Scotland, and HSBC fell between 0.4 and 1.4 percent while Barclays, Standard Chartered, and Lloyds TSB gained 2.8 to 4.3 percent. Meanwhile, the climate for Britain's embattled retailers continues to worsen. Retail sales fell at their sharpest pace in more than three years in November, the British Retail Consortium said, while profits are set to plunge at high street stores by 3.6 billion pounds ($5.3 billion), according to researchers Verdict. However, analysts said that given the grim economic backdrop, investors are not too alarmed by this type of data. "There's a lot of bad news priced in, and the market is taking theses numbers in its stride. It will take a substantial disappointment to dent stocks," Griffiths said. Marks & Spencer gained 2.9 percent, Kingfisher added 2.6 percent and Next put on 2.6 percent. Miners also gained in the face of falling metal prices, with copper down 5.3 percent. Kazakhmys gained 5.7 percent, helped by a Seymour Pierce upgrade to "buy", while Rio Tinto added 3.6 percent and Anglo American climbed 2.3 percent. Heavyweight mobile telephone operator Vodafone gained 0.1 percent. It said it would make a public offer for navigational and locating services firm Wayfinder Systems, valuing the Swedish company at $30 million. (Editing by John Stonestreet)

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