* FTSE up 0.9 percent, BoE hold interest rates at record low
* Banks rally, helped by Europe comments
* Retailers fall on downbeat comments
By David Brett
LONDON, Sept 9 (Reuters) - Bullish comments on the European recovery helped Britain's top shares rebounded on Thursday as investors bought such cyclical stocks as banks and commodities, while the Bank of England held interest rates at a record low.
By 1117 GMT, the FTSE 100 was up 47.00 points, or 0.9 percent at 5,476.74, having bounced off the session low of 5,412.48.
There was more upbeat sentiment emanating from Europe, where concerns have grown in recent days over the health of the continent's recovery, which has been hampering banks.
The euro zone is on the brink of a sustainable recovery and the European Central Bank is likely to discuss removing some support measures at its December meeting, Governing Council member Yves Mersch said.
Lloyds Banking Group rose 2.5 percent after agreeing to sell its stake in housebuilder Crest Nicholson to U.S. investment company Varde. It was also helped by an upgrade by Barclays Capital.
The Bank of England kept interest rates at 0.5 percent for the 18th month in a row and announced no new quantitative easing purchases, in a widely expected decision.
"Both the U.S. Federal Reserve and the BoE would not be prepared to tolerate any loss of momentum in their respective economies," said Mike Lenhoff, chief strategist at Brewin Dolphin, commenting on the likelihood of the BoE extending its quantitative easing programme.
He added there had been a turn in sentiment in the market after more positive newsflow from the United States, which has seen investors reappraise their view of the economic backdrop and take a more bullish stance.
The FTSE has gained 7.2 percent since August 25.
Energy and mining stocks rallied after some early weakness, following a sell-off overnight in China, as risk appetite returned among investors.
There was a little bit of short-term weakness this morning on the Chinese news," Jimmy Yates, head of Equities at CMC Markets.
"There's a feeling the miners are undervalued on concerns about the Australian mining tax, which had weighed on it a little bit."
ARM Holdings added 5.9 percent after it unveiled a new low-power processor for next-generation smartphones, mobile computing, servers and wireless networking.
Wall Street pointed to a higher open on Thursday, shrugging off late session weakness on Wednesday, ahead of U.S. weekly jobless data and July trade figures.
Home Retail shed 3.3 after it lowered guidance for full-year profit, while Wm Morrison Supermarkets, Britain's fourth-biggest grocer, fell 0.7 percent after saying it expects its markets to remain this year.
British music, books and games retailer HMV Group plunged 10.9 percent after reporting a worse-than-expected plunge in first-quarter sales, and Game Group, the video games retailer, dropped 5.3 percent in sympathy.
Britain's goods trade deficit with the rest of the world unexpectedly widened to a record high in July, data showed. (Additional reporting by Simon Jessop; Editing by Karen Foster)