FTSE rallies beyond 12-month high, commodites jump

* FTSE 100 up 1.7 percent

* Commodity stocks, banks add most points * JP Morgan results eyed

By Simon Falush

LONDON, Oct 14 (Reuters) - Britain's top share index rallied to its highest in over a year on Wednesday, powered by gains in commodity stocks and banks as results from Intel Corp fuelled optimism on the demand outlook.

By 1024 GMT, the FTSE 100 <.FTSE> was 1.7 percent or 86.00 points higher at 5,240.15, having touched its highest since late September 2008, after closing 1.1 percent weaker on Tuesday.

Intel's quarterly outlook and results soared past expectations on Tuesday, sending its shares 7 percent higher and lifting hopes the corporate results season would provide more evidence the global economy was recovering fast.

"Companies are beating consensus, there's a higher level of liquidity in the equity markets and the macro-economic picture is improving," said Henk Potts, strategist at Barclays Wealth.

"That's a powerful mix of positivity that's contributed to the recent gains."

Miners led the FTSE 100 index higher, tracking stronger metal prices which were bolstered by a weaker dollar <.DXY> as well as an improved demand outlook. Gold , which has gained over 13 percent since September, hit a fresh record high.

Rio Tinto added 5.1 percent after raising its production guidance for iron ore this year by 5-7.5 percent to 210-215 million tonnes, after reporting a 12 percent jump in third-quarter output. [ID:nSYD542337]

Xstrata , Lonmin , Anglo American , Kazakhmys and Fresnillo added up to 5.4 percent.

Energy stocks were also solidly higher as crude sailed to around $75 per barrel, touching its highest in nearly 12 months. BG Group , BP , Royal Dutch Shell , BP and Cairn Energy added 1.9-2.9 percent.

Data also helped lift the mood. Figures showed unemployment rose less than expected, with the number of Britons claiming jobless benefit rising at the slowest pace since May 2008. [ID:nLE600100]

JPMORGAN EYED

Investors were awaiting earnings news from JPMorgan Chase , scheduled for release on Wednesday, with Citigroup and Goldman Sachs due to report on Thursday, and Bank of America and General Electric on Friday.

Ahead of the results from their peers, British banks were also firmer, benefiting from a broadly improved risk appetite.

Barclays , HSBC , Royal Bank of Scotland and Lloyds Banking Group were up 2.5-4.3 percent.

Drugmakers moved higher too, with GlaxoSmithKline , AstraZeneca and Shire adding 0.7-1.2 percent.

A key U.S. Senate committee endorsed a sweeping healthcare overhaul on Tuesday, gaining the support of an influential Republican and delivering President Barack Obama a victory on his top domestic priority. [ID:nN13183672]

Among individual gainers, Burberry added 3.5 percent after beating second-quarter revenue forecasts, helped by demand for handbags and leather goods. [ID:nLE114807]

Among a relatively short list of fallers, shares in International Power shed 2.7 percent, heading the FTSE 100 fallers after Morgan Stanley cut the power firm's rating to 'equal-weight' from 'overweight' in a cautious review of European utilities.

Diageo was also a standout loser, down 2.8 percent after the spirits group said underlying sales fell a sharper-than-expected 6 percent in its first quarter. [ID:nLD581745]

British Land and Tesco fell after trading ex-dividend.

After the JPMorgan results, due around 1100 GMT, the focus will shift to U.S. September retail sales, scheduled for release at 1230 GMT, and publication of the minutes of the Sept. 22-23 FOMC meeting, due out at 1800 GMT.