* FTSE gains 0.7 percent as risk appetite returns
* Index futures, options, stock options expire on Friday
* Housebuilder Taylor Wimpey sees continued stability
By Harpreet Bhal
LONDON, June 19 (Reuters) - Britain's top share index gained 0.7 percent early on Friday as upbeat news from housebuilder Taylor Wimpey lifted sentiment about the health of the economy, while rising oil prices pushed energy majors higher.
By 0809 GMT the FTSE 100 was up 29.22 points at 4,310.08 after narrowly crossing into positive territory at Thursday's close.
High volatility was expected on the index ahead of the expiry of index futures, index options and stock options on Friday, known as "triple witching".
"We've got triple witching coming up across several markets across the globe, and that's certainly holding markets in check for the time being ... We're lacking a great deal of direction in anticipation of the triple witching event," said Keith Bowman, analyst at Hargreaves Landsdown.
Energy stocks gained ground as oil prices stayed above $71 a barrel. BP added 0.5 percent, while BG Group gained 1.8 percent. Royal Dutch Shell, however, fell 0.2 percent.
Miners recovered after recent falls, with Lonmin, BHP Billiton, Anglo American, Kazakhmys and Rio Tinto up between 0.2 and 4.3 percent.
Xstrata, buoyed on Thursday by a pair of broker upgrades, gained 3 percent after the Financial Times quoted an unnamed banker as saying that commodity trader Glencore, which owns over a third of the miner, was in talks with bankers about a flotation.
Banks were the best performing blue chips, with Barclays, Standard Chartered, Lloyds Banking Group, Royal Bank of Scotland , and HSBC gaining between 0.5 and 2.4 percent.
HSBC was supported by UBS, which added the stock to its Europe "Key Call list" in a strategy review.
Life insurances saw good support as well, helped by a bullish Deutsche Bank note on the sector, with the broker raising target prices across the board.
Aviva was the top FTSE 100 riser, up 5.1 percent, while Standard Life, Prudential, and Friends Provident added from 2.2 to 2.6 percent.
RECOVERY SIGNS
In a sign that the UK housing market could be slowly recovering, British housebuilder Taylor Wimpey said it had seen stability in the past six weeks, and it might increase the number of new sites during the second half.
Investor sentiment on Wall Street on Thursday was lifted by positive data that showed the number of people staying on jobless benefits fell for the first time since January, while manufacturing in the U.S. Mid-Atlantic region contracted much less than expected in June.
Drugmakers were on the up, buoyed by strength in AstraZeneca , which rose 1.1 percent as UBS added the stock to its "First XI" list citing drug pipeline opportunities.
Peer Shire edged up 0.4 percent, while GlaxoSmithKline gained 0.1 percent.
Defensive issues saw their recent attractiveness fade as risk appetite returned, with tobaccos, food & drug retailers, telecoms, and household goods all featuring among the biggest sector fallers.
Among the worst off, Smith & Nephew shed 1.3 percent, BT Group lost 1.1 percent, Unilever and Imperial Tobacco both fell 0.6 percent. (Editing by Will Waterman)