* FTSE 100 up 2.1 percent
* Miners rally in tandem with record high commod prices
* Intel, Reckitt, Home Retail earnings lift sentiment
By David Brett
LONDON, April 20 (Reuters) - Commodity stocks helped power Britain's top share index sharply higher on Wednesday, while earnings from Reckitt Benckiser and Home Retail, following U.S. tech bellwether Intel, boosted risk appetite.
The FTSE 100 closed up 125.39 points, or 2.1 percent, at 6,022.26 following a 0.5-percent gain on Tuesday. This wiped out Monday's 2.1-percent drop, driven by the S&P ratings agency cutting its U.S. credit outlook to negative.
"Recent volatility has created a perfect scenario for investors and fund managers to top up holdings at beaten down prices," Jimmy Yates, head of equities at CMC Markets, said.
Sovereign debt worries and global political unrest has seen investors pour funds into commodities. Gold hit $1,500 an ounce for the first time in its history and oil held near multi-year highs around $122 a barrel.
"Commodity stocks have endured a sticky start to 2011 as investors have rotated into 2010's underperforming sectors. Now we're seeing focus switch. High commodity prices and demand from emerging markets, where the only real growth is in 2011, will drive earnings and investors' demand for commodity stocks."
Data overnight in China helped sentiment. Shore Capital analysts said the Conference Board leading index showed signs that the pace of slowdown in the Chinese economy is moderating, which should help miners start to pick up market leadership.
Miners were strong performers. Xstrata added 4.9 percent as JPMorgan upgraded its rating on the firm to "overweight" from "neutral", citing its outlook and potential benefits from part-owner Glencore's listing on the FTSE.
BHP Billiton climbed 2.6 percent after it boosted its quarterly production of iron ore.
Integrated oils rose. BP added 3 percent as Russian Prime Minister Vladimir Putin tried to soothe BP's worries about its future in the country, after the British firm's Arctic exploration and share swap deal with Rosneft deadlocked.
EARNINGS BOOST
Earnings optimism helped lift London's blue chips, with ARM Holdings up 5.7 percent after strong results from U.S. tech firm Intel.
Reckitt Benckiser rose 3.9 percent after the British consumer goods group beat first-quarter earnings forecasts just days after the shock retirement of its chief executive Bart Becht sent the shares tumbling.
FTSE 250 firm Home Retail Group gained 5.5 percent after assuaging investors' fears with in-line results, which helped propel peer Kingfisher up 3.8 percent.
A ratings upgrade to "outperform" from "sector perform" by RBC Capital Markets helped lift aerospace parts manufacturer GKN 5.6 percent.
HSBC raised earnings estimates, ratings and target prices for some UK housebuilders, which the broker said should benefit from new-build price resilience and government intervention.
Among the firms HSBC upgraded were FTSE 250 firms Persimmon and Bovis Homes, up 1.6 and 1.7 percent respectively, which helped boost appetite for FTSE 100 peer Wolseley, up 3.8 percent.
Technical Analysts warned of the recent volatility is likely to continue.
"(Has) the leading index already put in a short-term bottom (around 5,860)? - it really is too soon to tell. Technical evidence pointed towards more volatile, choppy trading for the FTSE and that is still very much the case," a technical analyst said.
BAE Systems, Legal & General, Reed Elsevier and Resolution all traded ex-dividend.
Wall Street was up strongly as the UK market closed with signs that confidence in the recovery of the world's biggest economy was growing.
Sales of previously owned U.S. homes rose more than expected in March, suggesting the housing market's downward trend may be close to hitting a bottom, while applications for U.S. home mortgages rose for the first time in a month last week. (Additional reporting by Jon Hopkins and Tricia Wright; Editing by Jon Loades-Carter)