FTSE up 1pct; miners and oils rally on weak dollar

* Miners and oil stocks gain as commodity prices rally

* Investors eye two-day U.S. Fed meeting

* U.S. futures point to higher open

By David Brett

LONDON, Sept 22 (Reuters) - Britain's leading share index was 1 percent higher at mid-session on Tuesday, with resurgent commodities prices and a weaker dollar boosting mining and energy stocks.

By 1058 GMT, the FTSE 100 <.FTSE> was up 48.69 points at 5183.05, after closing 0.7 percent lower on Monday to end a six-session winning streak.

"The dollar index is severely weak... losing most of the gains it has made in the last two trading days and this is helping demand for dollar-based assets such as copper and crude oil," said Joshua Raymond, Market Strategist at City Index.

Miners added the most points to the index as metals prices turned positive. Fresnillo , BHP Billiton , Kazakhmys , Lonmin , Rio Tinto , Xstrata and Vedanta Resources rose 2.2 to 5.1 percent.

Oil majors advanced as crude prices rose above $70 a barrel on a technical rebound from a 3.2 percent decline. BG Group , BP , Cairn Energy , Royal Dutch Shell , and Tullow Oil were up 1.1 to 2.2 percent.

The FTSE has rebounded close to 50 percent since the lows hit in March, leaving investors cautious as to how far this rally can continue.

"We have seen a degree of short positions remain so far and this indicates that today's gains may be limited, at least until tomorrow's FOMC rate decision," Raymond added.

Investors will also be keeping a close eye on a two-day U.S. Federal Reserve meeting, which begins on Tuesday, and a Group of 20 leaders' meeting at the end of the week.

Carnival rose 4.1 percent after Banc of America-Merrill Lynch added the firm to its "Europe 1" list.

Imperial Tobacco gained 0.4 percent, after the world's No. 4 cigarette group said its current-year trading remained in line with its own expectations. [ID:nLL669884]

"We continue to see Tobacco as the most attractive of the European consumer staples sectors, and Imperial ... remains the best way to play the space," RBS analysts wrote in a note.

Cadbury edged up 0.5 percent. The confectioner has approached Britain's takeovers panel to ask Kraft Foods either to make a formal takeover proposal or walk away for six months, the Financial Times said, citing people close to the matter. [ID:ID:nWEN3800]

UTILITIES LAG

Utilities and food retailers weighed on the index, as investors switched into riskier cyclical assets.

Severn Trent shed 2.6 percent as investors fretted over the possibility of a rights issue from the water company. Evolution Securities downgraded the stock to "add" from "buy". [ID:nLM211281]

Fellow utility firms National Grid and United Utilities shed 0.7 and 2.6 percent respectively.

Food retailers were also lower, with supermarket chain Tesco down 0.5 percent after the Daily Telegraph reported its retailing services chief executive Andrew Higginson warned of a flat Christmas at best for British retailers.

The paper also cited a survey among 32 business leaders, which found retailers feared renewed setbacks in 2010.

WM Morrison and J Sainsbury lost 0.7 and 1.2 percent respectively.

However, Marks and Spencer found support , rising 2.6 percent after Banc of America-Merrill Lynch raised its price target to 450 pence from 410 pence and reiterated its "buy" rating on the stock. [ID:nLM222353]

Investors will be focused on U.S. monthly house prices data for July at 1400 GMT.

U.S. stock index futures pointed to a higher opening on Wall Street, the futures for the S&P 500 , Dow Jones and Nasdaq 100 were all up 0.7 percent.

(Editing by Lin Noueihed)