* Energy stocks rise as crude hits year high
* Miners rally; BHP in takeover talks
* Banks gain; BofA Merrill Lynch, GE earnings awaited
By David Brett
LONDON, Oct 16 (Reuters) - Britain's top share index rose 0.6 percent early on Friday rebounding from Thursday's falls led by gains in commodity issues, buoyed by firmer raw material prices, and by banks, with further U.S. earnings news awaited.
At 0826 GMT, the FTSE 100 was up 33.89 points at 5,256.84, after closing down 0.6 percent at 5,222.95 on Thursday.
The FTSE 100 has surged 51 percent from a six-year trough hit in March, but is still 3.6 percent below its level in mid-September 2008 before the collapse of Lehman Brothers.
"Cyclicals are pushing forward and that is how it has to be at the moment, defensives are not the stocks to be engaged in at the current moment," said Stephen Pope, chief global market strategist at Cantor Fitzgerald.
Energy stocks were the biggest gainers as U.S. crude oil futures hit a one-year high, rising more than 3 percent to around $77.50 a barrel, after data showed gasoline and distillate inventories fell sharply in the latest week,
BG Group, Royal Dutch Shell, BP, Tullow Oil and Cairn Energy were up 2 to 2.8 percent, also underpinned by target price increases from ING. Miners bounced back from losses in the previous session lifted by a strong outlook for metals prices in a recovering global economy.
BHP Billiton was up 1 percent. The miner launched a A$204 million takeover offer for Australian prospector, United Minerals Corp. as it bids for more ground in the iron ore rich Pilbara district of west Australia.
Rio Tinto, Lonmin, Anglo American, Xstrata and Fresnillo added 0.4 to 1.1 percent.
Banks were also in demand following the slew of earnings numbers from U.S. peers over the previous two sessions and with Bank of America Merrill Lynch results due on Friday.
Lloyds Banking Group gained 3.3 percent, topping the FTSE 100 leaders board and rallying after recent falls on rights issue concerns thanks to support from a Deutsche Bank upgrade and news of another, small disposal.
Barclays, HSBC, Standard Chartered, Royal Bank of Scotland rose between 0.1 and 0.9 percent.
DEFENSIVES DOWN
As investors turned to perceived riskier cyclical assets, defensive issues were on the backfoot.
Food retailers retreated after sector surged on Thursday on the back of speculation that the Qataris were about to make a takeover move for J Sainsbury.
J Sainsbury, which had gained 10 percent in the previous session, fell 2.6 percent.
Pharmaceutical firms AstraZeneca and GlaxoSmithKline shed up to 0.3 percent, but Shire bucked the trend, rising 4 percent, as Citigroup repeated its "buy" rating on the stock.
Among individual fallers, British Airways dropped 0.5 percent after the Times reported it is facing the threat of strike action unless it reaches an agreement on Monday when chief executive Willie Walsh will meet union heads representing the airline's cabin crew.
Among mid-cap issues, bus and rail operator National Express plunged 25.3 percent after a consortium, led by Spain's Cosmen family, decided against making a takeover offer for the firm.
The news saw peers Stagecoach and FirstGroup shed 5.8 and 1 percent respectively.
Aside from Bank of America Merrill Lynch, investors will also eye quarterly earnings numbers from U.S. financials giant General Electric later on Friday.
U.S. September industrial output and capital utilisation numbers are also due at 1315 GMT, followed by the preliminary reading for October's University of Michigan consumer sentiment index at 1355 GMT. (Editing by Hans Peters)