* Banks recover after BoE inflation report
* Energy stocks firmer as crude stabilises
* Miners mixed awaiting FOMC outcome
By Tricia Wright
LONDON, Aug 12 (Reuters) - Britain's top share index rose in midday trade on Wednesday, as the market breathed a sigh of relief after the Bank of England's inflation report, with energy and banking stocks among the biggest blue-chip gainers.
By 1105 GMT, the FTSE 100 index was up 19.67 points, or 0.4 percent, at 4,691.01, after closing down 1.1 percent on Tuesday, its biggest fall in a fortnight after hitting 2009 highs on Friday.
British inflation will be well below the 2 percent target in two years if interest rates rise in the first quarter, the Bank of England said, suggesting markets are pricing in rate hikes too early.
British unemployment hit its highest rate since 1996 in the three months to June, official figures showed, while the number of people claiming jobless benefit rose broadly as expected in July.
Banks were among the top blue-chip risers, rebounding after falls earlier in the session, as investors' attention shifted away from ongoing fears of potential cash calls in the sector to positive noises from the inflation report.
Lloyds Banking Group was the best off, up 5.4 percent, while Royal Bank of Scotland, Standard Chartered and Barclays rose 0.2 to 5.2 percent.
"I suspect that the fact that (BoE governor) King has said there continues to be scope to change his policy if necessary may well be playing into the banks' hands, " said Richard Hunter, head of UK equities at Hargreaves Lansdown.
Lloyds, which was reported as considering a multi-billion pounds share offering at the weekend, said it would sell the bulk of its Insight Investment unit to Bank of New York Mellon for 235 million pounds.
Oil stocks added the most points to the FTSE 100 as crude prices stabilised around $69, with BG Group adding 3 percent, supported by an ING upgrade to "hold" on valuation grounds, while Royal Dutch Shell gained 1.7 percent, and Tullow Oil climbed 2.1 percent.
It was a mixed picture among the miners, amid concerns over the strength of any global economic recovery ahead of comments from the Fed.
Antofagasta and Lonmin rose 1.4 percent and 2.3 percent, respectively, while Rio Tinto, Randgold Resources and Fresnillo fell 0.6 to 0.8 percent.
BHP Billiton, the world's largest miner, gave a cautiously optimistic outlook for commodities demand on Wednesday after posting a 51 percent dive in second-half profit, its first profit fall in seven years. Its shares rose 1 percent.
Construction and engineering group Balfour Beatty was the top blue chip performer, up 6.6 percent after it said underlying first-half pretax profit rose by 14 percent, boosted by growth at its U.S. operations.
Defensive attractions boosted tobacco stocks, with British American Tobacco gaining 0.1 percent and Imperial Tobacco adding 1.6 percent.
Ex-dividends factors knocked 8.65 points off the FTSE 100, with BP, BT Group, Pennon, RSA Insurance, Schroders, Standard Chartered and Standard Life also losing their payout attractions.
The focus will now switch to the United States and the outcome of the latest rate-setting Federal Reserve Open Market Committee meeting.
The Fed is expected to hold rates near zero when it makes the announcement at 1815 GMT and let a $300 billion programme to buy Treasury securities expire on schedule in September as economic gloom lifts.
"Having come through the second quarter season relatively unscathed both sides of the pond, I think the concentration is now going back to economic data just for some sort of confirmation that perhaps we've seen the worst," said Hargreaves Lansdown's Hunter. (Editing by Hans Peters)