* FTSE ends up 1.2 percent at fresh four-month high
* Lloyds Banking Group leads bank stocks higher
* Miners get China production data boost
* "Optimists" eye index at 5,800-plus by yearend-analyst
By Simon Jessop
LONDON, Sept 13 (Reuters) - Britain's top share index ended higher on Monday after banks rose sharply in response to a new deal over global banking rules while mining shares gained on the back of bullish China industrial data.
The FTSE 100 closed up 63.89 points, or 1.2 percent, at 5,565.53 points, a fresh four-month closing high.
"It has been a strong performance across all sectors today," said Anthony Grech, head of research at IG Index, adding "those of a more optimistic persuasion" were starting to think of a return to the April highs above 5,800 before year-end.
Banks added the most points to the index after a deal by regulators on Sunday gave banks an extended period in which to more than triple their minimum cash reserves and help prevent a fresh credit crisis.
The deal capped fears of a stampede for fresh capital and prompted fresh buying, with state-backed Lloyds Banking Group leading the sector with a 2.6 percent gain.
"A lot of investors are flying to Lloyds because the potential for upside is better," said Kishan Mandalia, trader at City Index, citing its undervaluation relative to Barclays and stronger balance sheet than state-backed peer RBS.
The generous time given to banks to build up balance sheet strength had particularly helped Lloyds and RBS, which rose 2.3 percent, said IG Index's Grech.
Investors' risk appetite was evident in the FTSE 100 Volatility Index, or "fear gauge", which fell over 4 percent to 18.7. The lower the reading, the higher the risk appetite.
A strong U.S. open on Monday -- with the Dow Jones Industrial Average up over 1 percent, led by banks such as JP Morgan Chase & Co and Bank of America Corp -- had further fuelled London trade, Mandalia added.
GROWTH PLAYS
Buoyant China factory output data overnight boosted the price of metals and underpinned a subsequent gain in mining stocks that took the sector to its highest close since June 21.
Copper miner Kazakhmys ended up 5.2 percent, topping the FTSE 100 gainers and outperforming the sector-wide uptick after breaching resistance at around 1,300 pence, which had been proving a stumbling block, said Bill McNamara, technical analyst at Charles Stanley.
Heavyweight integrated oil stocks added 10 points to the index on the back of the China industrial and oil demand data, as well as the shutdown of a key pipeline, which pushed prompt-month crude to a fresh 1-month high.
Elsewhere among individual stocks, building supplies firm Wolseley gained 5 percent on a bullish note from Morgan Stanley citing its company specific growth drivers and attractive valuation, said traders.
UK insurer Prudential added 3 percent to hit an 8-month high after the Sunday Times newspaper reported a group of Chinese investors were mulling a takeover bid.
On the downside, Associated British Foods fell 1.5 percent after sales growth at its Primark unit slowed and it warned of lower profit margins at the retailer due to higher cotton costs and increased taxes.
(Editing by David Cowell)