* Energy stocks lifted as crude oil prices rise
* Banks, miners also gain * British Airways higher after pay cut agreement
By Simon Falush
LONDON, June 26 (Reuters) - Britain's top share index gained 0.7 percent early on Friday, as rising crude prices fuelled strength in energy stocks, while banks and miners also gained ground as investor's risk appetite recovered.
By 0804 GMT the blue-chip index was up 29.82 points at 4,282.39 after falling 0.6 percent on Thursday to close at 4,252.57. The index is down 3.6 percent this year, but is up 23.5 percent from a six year low set in March.
Energy stocks provided the most fuel to the rally as crude prices motored back to around $71 per barrel.
BP, Royal Dutch Shell, BG Group, Tullow Oil and Cairn Energy added between 0.8 and 1.2 percent.
"There's been a sell off in the last few weeks but nothing much has fundamentally changed and there's a slightly improving trend to data, so there's no reason to get too pessimistic," said Lars Kreckel, equity strategist at Exane BNP Paribas.
The FTSE 100 touched a peak of 4,675.68 in May but fell back to just above 4,200 last week as jitters about the state of the global economy crept back.
Miners also gained as metal prices were broadly stronger helped by a weaker dollar.
Rio Tinto, Kazakhmys, Eurasian Natural Resources, Anglo American, Lonmin and BHP Billiton gained between 1 and 4.5 percent.
"(Rising commodity prices) are a sign of confidence returning to the market, that there is growing risk appetite," Kreckel said.
BANKS BOOSTED
Banks were the other main fillip for the index as increased confidence on the global economy helped the risk-sensitive stocks.
Barclays, HSBC, Standard Chartered and Royal Bank of Scotland gained between 0.3 and 2 percent but Lloyds Banking Group edged 0.3 percent lower.
Britain plans to strengthen the role of the Financial Service Authority, the Financial Times said on Friday, a day after the government dismissed talks of a rift with the head of the country's central bank over regulation.
British Airways was a top blue chip gainer, ascending 4.3 percent after the airline said late on Thursday that nearly 7,000 staff had agreed to voluntary pay cuts in a bid to save costs as it battles a downturn in travel.
U.S. stocks rallied on Thursday, with all the main indexes up over 2 percent as investors expressed relief that Federal Reserve Chairman Ben Bernanke withstood a barrage of pointed questions from Congress on the Bank of America-Merrill Lynch deal relatively unscathed.
Gains in Asia were more muted. Japan's core consumer prices fell 1.1 percent in May from a year earlier, the biggest decline on record, suggesting the country's second round of deflation in less than two years is deepening.
In the absence of any important UK economic data, investors in London will look to U.S. May personal income and consumption numbers, the Fed's preferred measure of inflation, to provide another snapshot of the health of the world's biggest economy.
The final reading for the University of Michigan Consumer Sentiment index is also likely to attract attention. (Reporting by Simon Falush; Editing by Hans Peters)