* FTSE up 0.3 percent
* Banks and energy share higher on technical grounds
* Miners lower as dollar picks up, Rio, BHP JV off
By David Brett
LONDON, Oct 18 (Reuters) - Britain's top shares rose slightly by midday on Monday with strength in oils and banks outpacing weakness in miners dragged lower by a resurgent dollar and after their recent outperformance.
By 1042 GMT, the FTSE 100 was up 13.80 points, or 0.23 percent, at 5,716.95, bouncing off a session low of 5,670.07. The index closed down over the two previous days.
"Investors have understood that the worst case scenario is no longer the most likely," Societe Generale analysts said in a note, referring to the risk of recession in the United States and deflation in Europe having been all but ruled out.
"Blue chip companies are flourishing and earnings outlook remains positive. All of these factors should give heart to investors and incite them to move progressively back towards equities."
Energy shares and banks were the standout performers as investors looked to pick up stock on the cheap.
Oil majors BP and BG Group were up 0.4 and 1.3 percent respectively, while state-backed lender Lloyds Banking Group rose 2.2 percent, with traders citing technical factors.
The world's largest listed hedge fund Man Group, which has been firmer on bid speculation recently, added 2.3 percent with traders saying despite their recent rally they are still seeing further upside for the stock.
Mid cap firm BlueBay Asset Management leapt almost 30 percent as Royal Bank of Canada pounced to buy the fund manager for around 963 million pounds ($1.5 billion).
Compared with the miners which have risen almost 30 percent since their recent low on Aug. 25, energy and financial assets have climbed just 14.7 and 6.5 percent respectively.
MINER BLIP
Miners extended Friday's falls in tandem with metal prices, which fell across the board as the battered dollar rose on Monday to edge further away from a 10-month low set on Friday.
"The fall in the dollar recently has led to a rise in commodity prices, and that has been good for the miners so (with the dollar rebounding) there is a bit of weakness there," said Richard Hunter, head of UK equities at Hargreaves Lansdown.
Sector sentiment was also soured as BHP Billiton and Rio Tinto, down 1.5 and 1.2 percent respectively, announced the cancellation of their proposed iron ore joint venture as expected, caving in to opposition from regulators, steelmakers and major investors 16 months after unveiling the plan.
Retailers were weak as investors awaited the British government's Comprehensive Spending Review on Wednesday, which is expected to involve a swathe of cuts to the public sector that could hit consumer spending hard, traders said.
Tesco was off 0.6 percent and Home Retail, the owner of Argos which reports results on Wednesday, was down 0.9 percent.
U.S. stock index futures pointed to a lower open on Wall Street with September U.S. industrial production figures due at 1315 GMT, and corporate results from companies including Citigroup, due at 1200 GMT, and Apple, set to report after Wall Street's close. (Editing by David Cowell)