* Miners rise with metal prices
* Defensive issues weak led by drugs, tobaccos
* Oils fall back with crude price
By Jon Hopkins
LONDON, June 24 (Reuters) - Britain's leading share index was 0.2 percent higher mid-session on Wednesday as gains from heavyweight miners and banks offset weakness in defensive issues, such as drug and tobacco stocks, and in oils.
By 1038 GMT, the FTSE 100 index was up 8.07 points at 4,238.09 after closing 4.03 points lower on Tuesday.
"It's like watching paint dry," said Manus Cranny, head of sales at MF Global.
"But we think people are mainly shaving positions and there is still a net appetite to be long of the markets ... they are not tanking, they are retracing and it's just something of a reality check."
Strength in heavyweight miners was the main prop for the market by midday, with metal prices rising as the dollar weakened, reviving interest in the sector.
Anglo American was the top FTSE 100 gainer, up 5.9 percent as takeover speculation continued to swirl around the stock, following the miner's rejection on Monday of a merger of equals proposed by Xstrata.
Takeover interest in Anglo American has revived the prospect of a sale of heavy building materials group Tarmac, its most out-of-place division, The Financial Times said.
For a view on Anglo American's options by Reuters columnist Alexander Smith, double-click on.
Among the other miners, Kazakmys, Eurasian Natural Resources, Vedanta Resources, Rio Tinto and Xstrata gained between 2.8 and 5.3 percent.
Banks also found support after recent falls, as investors awaited news from the U.S. Federal Reserve later on Wednesday.
Barclays, Standard Chartered, Lloyds Banking Group, Royal Bank of Scotland and HSBC gained between 0.4 and 4.2 percent.
The Fed is widely expected to keep interest rates on hold at a record low and maintain its planned debt purchases, so the focus will be on whether the bank tweaks its statements to reign in the slide in U.S. Treasuries that threatens the economy's budding recovery.
Before the Fed decision, which will be announced after European markets have closed, investors will look to U.S. new home sales data, to be announced at 1400 GMT, for further evidence of any recovery.
DEFENSIVES DRAG
After recent rallies by defensive stocks, some profit-taking emerged for heavyweight drugmakers, tobacco, and household goods stocks with sector rotation the main market activity.
GlaxoSmithKline shed 1.3 percent. The drugmaker announced late on Tuesday that the U.S. Food and Drug Administration had said it would not approve its experimental nausea drug Rezonic for cancer or surgical patients.
Peers AstraZenca and Shire lost 0.7 and 0.3 percent, respectively.
British American Tobacco fell 0.4 percent, Imperial Tobacco was off 0.2 percent, household product firm Unilever dropped 1.3 percent and mobile telecoms heavyweight Vodafone shed 0.7 percent.
Food retailers also suffered, with Tesco, Sainsbury, and Wm. Morrison losing between 1.2 and 1.7 percent.
British retail sales fell in June at the same pace as in May, though orders placed with suppliers picked up, a survey by the Confederation of British Industry showed on Wednesday.
The CBI's distributive trades survey sales balance remained unchanged in June at May's level of -17, in line with analysts' average forecast.
Britons' expectations for inflation in the year ahead rose to 2.0 percent in June from 1.6 percent in May, a survey by YouGov/Citigroup showed.
Ex-dividend factors accounted for the top two FTSE 100 fallers, with Friends Provident down 4.5 percent and Experian off 2.7 percent.
Weak oil majors were also a drag on blue chip sentiment as crude fell back below $69. BP, Royal Dutch Shell and BG Group were down between 0.4 and 0.7 percent. (Editing by Karen Foster)