* Commodity stocks up on higher oil, metals prices
* Insurers up after Prudential H1
* Banks extend Wednesday's gains
* Defensives fall as investors favour riskier assets
By Tricia Wright
LONDON, Aug 13 (Reuters) - Britain's top share index rose early on Thursday, amid widespread relief after the U.S. Federal Reserve said it saw signs of a stabilising economy, with commodities and financials the biggest blue-chip gainers.
By 0807 GMT, the FTSE 100 was 37.60 points, or 0.8 percent higher, at 4,754.36, after closing 45.42 points or 1 percent higher on Wednesday at 4,716.76.
The Federal Reserve said the economy was levelling out, and it left interest rates unchanged at the end of its two-day policy meeting.
The Fed also said it will extend the duration but not the size of a program to buy long-term government debt, which is part of its effort to revive credit and stimulate the economy..
Positive signals also came from Europe on Thursday, with data showing German gross domestic product rose in the second quarter.
"I think the market was reassured really by what we heard from the central banks yesterday, and that's why there's a level of confidence for investors to continue their recent appetite for risk," said Henk Potts, a strategist at Barclays Wealth.
"From a macro perspective investors can appreciate two things: that central banks will be supportive, and that the extraordinary efforts central banks have gone to to fight their way out of recession is showing tangible signs of working," he said.
Mining stocks added the most points to the FTSE 100 index, rallying against a background of firmer metals prices.
Lonmin, Rio Tinto, Kazakhmys and Xstrata put on between 3.3 and 4.2 percent.
Energy stocks were also in favour, as oil rose towards $71 a barrel on renewed optimism that the U.S. economy was through the worst of the recession which offset bearish U.S. inventory data showing continued weak demand.
BG Group, Royal Dutch Shell and BP added 0.5-1 percent.
Oil and gas services firm Petrofac was the biggest blue-chip riser, up 5.6 percent as the stock was added to the MSCI UK index.
Good gains were seen from insurers. Prudential climbed 2.1 percent as it raised its interim dividend after reporting a smaller-than-expected drop in half-year profit, and said its capital position remained strong.
Aviva Legal & General and Standard Life added 0.6-2.2 percent, though Friends Provident, days after agreeing to a revised takeover proposal from Resolution, slipped 0.1 percent.
Banks were also in favour, building on Wednesday's gains, with Barclays, HSBC and Lloyds Banking Group up 0.7-2.7 percent.
RISK APPETITE INCREASED
Weakness was seen among defensive tobacco and pharmaceutical stocks as investors turned away from assets perceived as safe bets amid growing optimism over the pace of economic recovery.
British American Tobacco and Imperial Tobacco fell 0.6 percent and 0.5 percent, respectively, while GlaxoSmithKline dropped 0.5 percent.
Thomas Cook, was the heaviest FTSE 100 faller, off 5.9 percent, after the travel firm said it did not expect to meet its operating profit target of 480 million pounds ($788.9 million) in 2010 because of tough market conditions.
Peer TUI Travel, which on Wednesday reported a sharp decline in winter bookings, fell 0.7 percent.
Later, investors' attention will shift to the United States and July retail sales numbers, due for release at 1230 GMT, with a 0.7 percent month-on-month rise forecast, after June's 0.6 percent increase.
July U.S. import and export inventories, the latest weekly jobless claims, and June business inventories will also be released on Thursday. (Editing by Rupert Winchester)