(Corrects GMT time in paragraph 2)
* Miners rebound as metal prices stabilise
* Energy stocks rally with crude prices
* UK May manufacturing output shrinks unexpectedly
By Jon Hopkins
LONDON, July 7 (Reuters) - Britain's leading share index was up 1.1 percent by midday on Tuesday with gains from miners, oils and banks offseting some weakness in defensive stocks as investors brushed off disappointing UK industrial output data.
By 1028 GMT the FTSE 100 was up 39.62 points at 4,234.53, after falling 1 percent to a two-month low on Monday.
The index has gained 21.3 percent since hitting a six-year low in March but is still down 5.3 percent for the year.
"It is a reversal of fortune that is lifting the FTSE up today, with a bounce back by the mining sector helping to lift sentiment across the market," said Philip Gillet, a sales trader at spread better IG Index.
Miners added the most points to the blue-chip index, reversing Monday's losses against a backdrop of stabilising metals prices.
Kazakhmys, Vedanta Resources. Lonmin, Rio Tinto, Antofagasta , Anglo American and BHP Billiton added 3.8-6.2 percent.
Oil shares also rallied as crude prices recovered slightly from recent falls, with BP, BG Group, Royal Dutch Shell, Cairn Energy and Tullow Oil up 0.8 to 3.4 percent.
And banks rebounded from early falls, extending Monday's rally with Royal Bank of Scotland, Barclays, HSBC and Standard Chartered adding 1.2-2.0 percent.
DEFENSIVES MIXED
Some defensive issues were also in demand as investors, still cautious after last week's disappointing non-farm payroll figures, switched into stocks perceived as resilient to economic weakness.
Drugmakers AstraZeneca and Shire found support, up 0.5 percent and 1.4 percent respectively.
Shire said on late on Monday that it has filed a treatment protocol for its Velaglucerase Alfa drug for Gaucher disease and is working with the U.S. Food & Drug Administration to file a new drug application for the treatment as early as possible.
Food retailers Tesco and Wm Morrison put on 0.6 and 2 percent respectively.
Wm Morrison was supported by an upgrade in rating to "buy" from "neutral" by Bank of America-Merrill Lynch.
But food producers were weak, with AB Foods the top blue chip faller, down 1.7 percent and Cadbury off 0.6 percent.
British American Tobacco and Imperial Tobacco shed 1 and 0.3 percent respectively and mobile telecoms heavyweight Vodafone fell 0.8 percent as the benefits of other defensive stocks faded.
British manufacturing output unexpectedly shrank in May, official data showed on Tuesday, making it less likely the economy returned to growth in the second quarter.
Manufacturing output fell 0.5 percent on the month in May compared with expectations of a 0.2 percent rise. April's figures were revised down to show no change instead of the 0.2 percent rise initially reported. On the year, factory output fell 12.7 percent. "It seems the clutches of recession are tighter than previously thought and it will take more than a single month of positive data to demonstrate that we are on the right side of the economy's trough," said Rob Pike, head of trading at spread better ShortsandLongs.com.
However, housebuilder Persimmon added 4.6 percent after saying it does not expect any further land writedowns as volumes and sales in the first half were better than 2008, though it remains cautious on outlook.
Other housebuilders pushed higher as well, with Bovis homes , Bellway, and Redrow up 2.3 to 4.3 percent, helped too by positive comment on Monday from RBS. (Editing by Greg Mahlich)