(Refiles to correct dateline of report to June 4)
* FTSE gains on oil, banks
* Market eyes BoE and ECB policy reviews
* UK house prices rise 2.6 percent in May - Halifax
By Catherine Bosley
LONDON, June 4 (Reuters) - Britain's top share index rose 0.5 percent in morning trade on Thursday, helped by oil, banking and insurance shares, and as investors eyed the outcome of the Bank of England's monetary policy review later in the session.
At 0819 GMT the benchmark FTSE 100 index was up 20.79 points at 4,404.21. The UK bluechip index closed 96.60 points or 2.1 percent lower on Wednesday at 4,383.42, and has lost 0.2 percent this year.
Oil majors led gains, with rebounding Royal Dutch Shell up 1 percent, BP up 1.3 percent, and BG Group up 0.2 percent.
"While (the markets) may get buffeted about from one day to the next, what they're really focusing on is the recovery," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London.
House prices in Britain rose by 2.6 percent in May, ahead of analysts expectations, the Halifax house price survey showed, underscoring optimism Britain's recession may be easing..
Lenhoff said any upbeat comments from the Bank of England could reinforce the market's optimism, though investors were not overly focused on its interest rate decision. The results of the Bank of England's Monetary Policy Committee meeting are due at 1130 GMT..
The Bank is expected to keep interest rates steady at a record low of 0.5 percent and refrain from expanding its quantitative easing plan, as it tries to estimate how Britain's economy is faring.
On Wednesday, U.S. Federal Reserve Chairman Ben Bernanke said before a U.S. Congressional committee he expected to see "some positive growth later this year" and warned that corralling government debt was vital to ensuring long-term U.S. economic health..
"I don't think they're expecting anything from the Bank of England," Lenhoff said. "When you have comments from the Fed that they're looking for a better second half (of the year) than first half.... I think what they're plugging into is the message that there are happier times ahead."
Banks were also among the risers. Barclays, HSBC, Lloyds Banking Group, Standard Chartered, and Royal Bank of Scotland gained between 0.5 and 3.2 percent.
Barclays said it plans to curtail its final salary pension plan for British staff.
INSURANCE GAINS
Insurance shares also gained strength, with sentiment helped by reports mutual life insurer Royal London will not have to take a writedown on the 300 million pounds it is owed by Hugh Osmond's Pearl Group. Pearl is undergoing a debt restructuring that is expected to see banks take a 400 million pound hit.
"If the market feels a little more relief, that will affect companies that were hit and de-rated at the time when the markets were really focusing on these bad assets," Lenhoff said of the insurance sector.
Aviva, the day's top winner, rose 4.3 percent, while Legal & General rose 3 percent, Old Mutual was up 3.8 percent and Prudential climbed 0.7 percent.
Metals prices firmed, but heavyweight miners were mostly weaker, with BHP Billiton and Anglo American dropping 0.5 and 0.2 percent, respectively.
Chinese state-owned metals firm Chinalco may revise its planned $19.5 billion investment in miner Rio Tinto before a June 4 deadline to avoid further delays in Australian government approval, two sources said..
The European Central Bank announces its interest rate decision at 1145 GMT. It is expected to keep its interest rate at 1 percent, and the market is keen to see details of its covered bond purchase plan. (Editing by Andrew Callus)