* FTSE set for fifth day of gains
* Strong earnings from U.S. firms lift sentiment
* Citigroup, General Electric results eyed
By Harpreet Bhal
LONDON, July 17 (Reuters) - British shares rose early on Friday, on track for a fifth straight day of gains, as upbeat U.S. corporate earnings supported optimism about the pace of global recovery, lifting oil majors, miners and banks.
By 0821 the FTSE 100 was up 0.7 percent or 30.86 points at 4,392.70, and set for its biggest weekly rise since January after hitting a four-week high in the previous session.
Strong earnings from U.S. firms IBM, Intel, Goldman Sachs and JPMorgan Chase have lifted global markets, with investors eyeing results from Citigroup and General Electric later in the session.
"If corporate earnings continue to exceed analysts expectations there is the argument that the equity market is undervalued and could squeeze considerably higher," said Manoj Ladwa, senior trader at ETX Capital.
Despite the positive sentiment, geopolitical worries could return to the surface after bomb blasts ripped through two hotels in Jakarta's business district, killing nine and injuring 42.
Oil and gas firms added most points to the index, as oil prices stayed above $61 a barrel.
BG Group, BP, Cairn Energy and Royal Dutch Shell added between 0.5 and 2 percent.
Royal Dutch Shell's subsidiary Shell Oil Co said it was considering staff cuts to its refineries and chemical plants on the U.S. Gulf Coast to reduce costs
Banks were also in positive territory, benefiting from strong earnings from JP Morgan and Goldman Sachs earlier in the week.
Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland rose between 0.2-1.1 percent. But market participants were cautious on the outlook for the sector.
"The thing (with the banks) is that there is also the corporate and mortgage and loan defaults which seem to be increasing and traders and economists will be keeping a very close eye on those numbers," Ladwa at ETX Capital said.
Miners were in demand with Anglo American, BHP Billiton, Eurasian, Kazakhmys, Rio Tinto and Xstrata up 0.9-3.2 percent.
Vedanta rose 2 percent after the India-focused group said it planned to expand to steel manufacturing with a partner.
British Airways was the top riser, up 4.2 percent after announcing plans to raise about 600 million pounds through bondholder debt and bank credit, reassuring investors about its funding position.
The airline also reported an operating loss of 100 million pounds for the three months ending June 30, but analysts said this was better than feared.
On the downside, engineering firm Invensys fell 1.8 percent, as it said reduced volumes in its short-cycle products would impact first half performance.
Defensive tobacco firms were lower, with British American Tobacco and Imperial Tobacco both falling around 0.5 percent. (Editing by Dan Lalor)