* FTSE up 1 percent
* Banks bounce, JP Morgan posts Q1 earnings
* GKN gains, some sector rotation seen on weak commods
By David Brett
LONDON, April 13 (Reuters) - Britain's FTSE 100 share index extended gains on Wednesday, with banks among the top gainers after results from U.S. investment banking giant JP Morgan beat expectations.
"There is the potential of a shift as to what drives the market forward," David Battersby, an investment manager at Redmayne-Bentley, said, adding the FTSE could see 7,000 by end-2011.
"Money has been made so far in oil and gold as a hedge and you could see these fall away as they've been pushed too far. That could actually be to the manufacturers' benefit because the cost to them will reduce and it will make them more attractive."
British industrial group GKN added 3.7 percent, recovering Tuesday's losses. The British plane and car parts maker issued a strong first-quarter update on Monday.
By 1122 GMT, the FTSE 100 was up 62.05 points, or 1 percent at 6,026.52, having closed down 1.5 percent at 5,964.47 on Tuesday.
Banks were the top performing sector among London's blue chip stocks as U.S. peer JPMorgan Chase & Co posted an increase in first quarter earnings.
Lloyds climbed 1 percent, having traded at nine month lows and below its 20-day moving average, after the Independent Commission on Banking (ICB) proposed the sale of sale hundreds more of its branches.
"The ICB report published earlier this week has contributed to underperformance in Lloyds shares versus its domestic peers," UBS said.
"With the shares trading at little more than historic tangible book value, downside scenarios are now more than priced in leaving the risk/reward firmly in investors favour."
COMMODS SUPPORT
Commodity stocks lent their support to the index, rebounding after Goldman Sachs on Tuesday said the recent rise in commodity prices had run its course, and concerns resurfaced over global growth prospects being dented by Japan's earthquake.
Miners were higher, with Fresnillo up 1.5 percent after the Mexican precious metals miner said it would meet 2011 silver production targets, while Gold output jumped.
Global miner Rio Tinto rallied 0.6 percent following an intitial fall after a production update.
"Rio's shares have run up very hard in recent weeks. They have made up most of the ground lost in the aftermath of the Japanese earthquake and may be due a pause," traders said.
"We would also highlight that if the Glencore IPO goes ahead, it may sap demand from elsewhere in the mining sector."
Integrated oils rose with BP gaining 1 percent, shrugging off concerns over its share swap deal with Russia's Rosneft.
Elsewhere, chip designer ARM Holdings bounced 4.3 percent with traders citing a the impact of a bullish note from Morgan Stanley.
Following a presentation by Microsoft in Las Vegas, showcasing a version of Internet Explorer 10 running on an ARM-based processor, traders said the broker was "positively surprised that software development is already well advanced".
Reckitt Benckiser rose 2.7 percent after Bernstein lifted its rating on the consumer goods group and JPMorgan raised its earnings estimates, arguing the valuation is compelling.
On the downside, insurer Old Mutual fell 2.4 percent after going ex-dividend, but with the stock likely to remain under pressure on technical grounds.
"The 14-day RSI has reached extremely overbought levels and, at the same time, volumes have started to fall away, suggesting that participation in the rally is diminishing," analysts at Charles Stanley said.
Ex-dividend factors knocked 2.43 points off the FTSE 100 index on Wednesday, with Aggreko, BG Group, Capita, IMI, Tullow Oil, and John Wood Group all trading without their payout attractions.
On the economic front in the UK there was surprise on the upside as Britain's jobless rate fell unexpectedly in the three months to February.
U.S. stock index futures pointed to a higher open on Wall Street on Wednesday, ahead of U.S. March retail sales figures are out at 1230 GMT, U.S. February business inventories are due at 1400 GMT. (Additional reporting by Tricia Wright, Editing by Louise Heavens)