* FTSE up 0.7 percent
* Commods rally ahead of Greek Parliament vote
* Banks mixed on European debt exposure uncertainty
By David Brett
LONDON, June 21 (Reuters) - Commodity stocks led Britain's top shares higher on Tuesday, though in thin volumes and after recent weakness, as investors awaited a vote of confidence in the Greek Parliament. The vote, due after market close, is seen as a step towards the passage of more spending cuts in exchange for foreign emergency loans.
The FTSE 100 was up 41.40 points, or 0.7 percent, at 5,734.79 by 1054 GMT, recovering the previous session's losses, as the index traded just 29 percent of its average 90-day volume by midday.
"The slight rotation into cyclicals (seen this morning) implies investors might be prepared to say that the threat of default has been discounted," said Jeremy Batstone-Carr, strategist at Charles Stanley.
"But given the low volume, I don't think anybody is holding that position with a high degree of conviction."
He said the ramifications for equity markets in the event of a Greek default on its debts were unknown, but the recent slide in equities reflected a partial attempt to discount the bad news.
Having shed 0.9 percent overall last week, its fourth straight week of losses, on concern about global economic growth and the euro zone debt crisis, the FTSE was helped higher by rebounding commodity stocks .
Antofagasta , up 3 percent, led the miners higher, while ENRC added 1.1 percent, extending the previous session's gains, buoyed by Goldman Sachs initiating coverage of the stock with a "buy" recommendation.
Oil major BP climbed 2.9 percent as oil services provider Weatherford , which provided equipment used in the Macondo well, agreed to pay BP $75 million toward the cost of the Gulf of Mexico oil spill.
ANXIETY OVER BANKS
Reflecting nervousness over Europe's debt problems, UK banks turned mixed after earlier gains, with Lloyds Banking Group down 0.6 percent.
"The contagion issue is a problem of European banks' exposure to Greece, directly or indirectly, through significant holdings in local banks and private sector credit exposure," said Stefan Angele, head of investment management at Swiss & Global Asset Management, which has around 80 billion Swiss francs of funds under management.
"A Greek default is not a viable solution, but austerity measures might hit the private sector's ability to repay credits."
Elsewhere, brewer SABMiller fell 3.3 percent after rival Foster's Group rejected its A$9.5 billion ($10.1 billion) cash takeover offer.
Back on the upside, Britain's biggest hotel and coffee shop operator Whitbread climbed 6.9 percent after revealing its London operations had performed strongly in recent weeks.
The world's biggest hotelier, InterContinental Hotels Group Plc , rose 1.4 percent, while tour operator Carnival added 1.8 percent ahead of earnings due later in the session.
Building supplies company Wolseley rose 3.2 percent as ING upgraded its recommendation on the firm to "buy", saying the U.S. presented opportunities for the company and it expected "fundamental growth for 2013 to be priced in in 2012, providing support throughout the year".
There was mixed news for the UK economy as British factory orders were stronger than expected in June, but Britain ran up a record budget deficit in the first two months of the fiscal year.
Wall Street futures pointed to a firmer open for stock markets in the United States on Tuesday, as the Federal Reserve starts a two-day policy meeting and ahead of U.S. May existing home sales data due at 1400 GMT.
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