* FTSE up 0.7 percent, Egypt President Mubarak resigns
* Banks, commodities as Mubarak decision boost sentiment
* Retailers fall on outlook concerns
By David Brett
LONDON, Feb 11 (Reuters) - Commodity and banking stocks drove Britain's FTSE 100 share index higher on Friday as traders welcomed the decision of the Egyptian President Hosni Mubarak to resign.
Egypt's Vice President Omar Suleiman said in a televised statement on Friday that President Hosni Mubarak had bowed to pressure from the street and resigned, handing power to the army.
"The market has taken the news well. It has cleared some uncertainty and boosted investor sentmient," Jimmy Yates, head of equities at CMC Markets, said.
The FTSE 100 index closed up 42.89 points, or 0.7 percent, at 6,062.90, bouncing off a session low of 5,973.44.
Miners and energy stocks rallied on the news from Egypt. Mid cap miner Centamin Egypt, with significant operations in the region, reversed a loss of more than 5 percent to gain 6.4 percent.
Anglo American, which is due to report earnings on Feb. 18, added 3.4 percent after De Beers, the world's largest diamond producer, returned to profit.
Anglo American said it would post underlying earnings of $302 million for the year from its investment in De Beers.
Energy heavyweight BG Group climbed 3.5 percent, hitting an all-time high during the session, with traders citing technical factors and its M&A potential.
"We like their outlook for next year and yield. They do continually have takeover speculation. I think the portfolio and exposure to Brazil makes them very attractive to the majors," Martin Dobson, head of trading at Westhouse Securities, said.
Oil explorer Tullow Oil rose 3.8 percent as Deutsche Bank and Barclays Capital upped their respective target prices on the stock, following an oil discovery at one of its interests in Ghana on Thursday.
BANKS REBOUND
Banks rebounded as risk appetite returned and investors shrugged aside European debt worries.
Lloyds Banking Group added 1.6 percent, while Barclays pared losses ahead of results due on Tuesday.
Insurer Legal & General rose 3.9 percent on a bullish note from Nomura, which lifted its price target.
Concerns over the outlook for retailers saw Next, Marks & Spencer and Kingfisher among the top fallers on London's blue chip index, down 0.5-3.1 percent.
Analysts said the latest weekly department store sales figures from John Lewis were underwhelming.
"The department store chain has started to struggle a little in the last few weeks against tough comparatives ... We can be sure that life will be much tougher elsewhere on the High Street," Arden Partners analyst Nick Bubb said.
Meanwhile British manufacturers' input costs rose at their fastest annual rate in more than two years in January.
U.S. markets were also higher as London closed, spurred on by the events in Egypt and after some decent consumer sentiment figures.
(Editing by Sophie Walker)