* FTSE up 0.7 percent, sell-off overdone
* Miners rally, Fresnillo gains as gold hits fresh highs
* Burberry rises after Q4 sales beat
By David Brett
LONDON, April 19 (Reuters) - Rebounding miners helped Britain's top share index rally on Tuesday, while Burberry was the top performer after the luxury goods firm beat consensus estimates with a fourth-quarter sales beat. By 0808 GMT, the FTSE 100 was up 38.89 points or 0.7 percent at 5,908.97, having closed down 2.1 percent, at 5,870.08, its lowest close since March 23, after ratings agency S&P cut its U.S. credit outlook to negative.
The FTSE 100 volatility index, a barometer of investor anxiety, fell 4.3 percent having jumped nearly 26 percent on Monday, its biggest one-day percentage gain since November 2009.
"It was a bit of a knee-jerk reaction. I don't think it's a step-changing issue where you are going to have further problems," Paul Mumford, who manages a 25-million-pound ($40.6 million) fund at Cavendish Asset Management.
UBS said S&P's warning was a case of "jumping the gun".
The broker says the U.S. marketable debt-to-GDP ratio is 63 percent and would expect that this ratio could rise to 80 percent over the next 2 years.
"It is still well below the 100 percent plus levels that have prompted downgrades in other triple-AAA rated countries in the past. Additionally, none of the countries whose debt was downgraded at those levels was the global reserve currency." Miners were the strongest performers as investors bought back on recent weakness, with Cavendish's Mumford saying the sell-off was a good opportunity to add to holdings.
Precious metals miner Fresnillo was 2.6 percent higher, boosted by a surging gold price, which hovered near all-time highs.
Vedanta rose 1.5 percent as the India-focused miner snapped up a 11 percent stake in Cairn India, sources said.
Cairn Energy, which agreed in August to sell a majority stake in Cairn India to Vedanta, rose 1.2 percent.
LUXURY IN FAVOUR
British luxury group Burberry climbed 7.8 percent after reporting a 33 percent rise in fourth-quarter underlying sales.
Sentiment among luxury goods firms was helped after French peer LVMH beat first-quarter sales expectations.
Retailer Marks & Spencer added 1.9 percent with traders citing an upgrade to "buy" from "hold" by Citigroup as a catalyst.
Tesco fell 1 percent after the world's third-largest retailer fell short of its expectations in a tough home market.
"Tesco results are fundamentally strong, although the performance is mixed," analysts at Espirito Santo Investment Bank said.
However, the broker says on 9.8 times calendar 2011 earnings, the shares look too cheap form a company offering 15 percent earnings growth and strong fundamentals.
Rivals Sainsbury and Wm Morrison were also lower.
Banks were mixed as they remained hamstrung by global sovereign debt concerns and ahead of Goldman Sachs results expected at around 1200 GMT. (Editing by Louise Heavens) ($1=.6163 Pound)