* Miners dominate blue-chip leaderboard
* Banks reverse previous session's losses
* Water utilities weak as regulator orders cut in bills
By Tricia Wright
LONDON, July 23 (Reuters) - Britain's top share index rose for a ninth straight day as investors cheered positive economic data from both the UK and the U.S., with miners and banks enjoying an afternoon rally after falls the previous session.
The FTSE 100 index rose 66.07 points, or 1.5 percent, to 4,559.80, the highest closing level since early January, making its longest winning run since late 2003.
The index touched a high of 4,566.77 earlier in the session, and has added more than 11 percent in the past nine sessions.
Investors cheered reassuring quarterly results, including from 3M Co and U.S. home sales and jobs data.
"(The FTSE's gains are) down to not only momentum from U.S. stocks, but all the economic data out today has been bullish, positive for stocks, ever since retail sales in the UK came out better than expected earlier this morning," said Angus Campbell, head of sales at Capital Spreads.
"Also in the U.S. jobless numbers ... continuing claims have fallen -- that's a major figure. It seems that those unemployment figures are really a very very important focal point for the market at the moment," he said.
U.S. government data showed claims for jobless benefits rose last week, roughly in line with expectations, while continuing claims for the previous week edged lower.
Mining stocks dominated the blue-chip leaderboard, rebounding after Wednesday's falls, against a backdrop of mixed metals prices.
Kazakhmys was the biggest FTSE 100 riser, up 9.5 percent, with ENRC, Vedanta Resources, Xstrata and Lonmin up 5.5-8.9 percent.
Energy stocks were also firmer, reversing losses from earlier in the session, as crude prices rose, buoyed by gains in the gasoline market and a rally on Wall Street.
Royal Dutch Shell, BG Group, Tullow Oil and Cairn Energy added between 0.1 and 1.4 percent.
FINANCIALS ADVANCE
Banks were also in demand, following a retreat in the previous session, with HSBC, Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group up 3.2-5.3 percent.
Water utilities were the greatest drag on the blue chips, under pressure after regulator OFWAT ordered a 4 percent cut to household water bills over the next five years, and said it would allow companies to make a return on their capital at the low end of expectations.
Pennon Group, Severn Trent and United Utilities fell between 3.4 and 7.3 percent.
Compass was off 7.5 percent, the biggest faller on the index, after the world's biggest caterer said sales growth slowed in the third quarter and looked set to weaken further..
On the macroeconomic front, June retail sales in Britain showed a jump of three times the rate expected by analysts, as hot weather and early summer discounting boosted sales of clothing.
Meanwhile, political uncertainty could return to haunt investors as voters head for the polls in a by-election in Norwich, east England on Thursday, where Prime Minister Gordon Brown faces a test of his leadership of the ruling Labour party.
A poor result for the Labour party threatens to embolden party dissidents who last month conspired to unseat Brown.
"Friday now becomes more important as the UK GDP numbers are released. A weaker number here has the potential to derail the recent rally and bring things crashing down to earth," said Jimmy Yates, head of equities at CMC Markets. (Editing by Rupert Winchester)