Commodities boost FTSE, banks up on Ireland hopes

* FTSE up 1.4 pct, commodities up as dollar ebbs

* Banks gain on hopes of progress on Ireland's debt crisis

By David Brett

LONDON, Nov 18 (Reuters) - Commodity-linked stocks powered a rally in Britain's top share index on Thursday, as a retreating dollar boosted commodity prices and strong corporate results pushed up shares in SABMiller.

By 1156 GMT, the FTSE 100 <.FTSE> was up 81.27 points, or 1.4 percent, at 5,773.83 after it gained 0.2 percent on Wednesday.

Energy <.FTNMX0530> and mining <.FTNMX1770> stocks such as Xstrata , up 2.3 percent, gained along with commodity prices as the dollar's rally stalled after subdued U.S. inflation data reinforced the Federal Reserve's case for quantitative easing.

Privately held commodities group Glencore [GLEN.UL], which holds a stake of nearly 35 percent in Xstrata, is considering listing in the first half of next year, according to sources. [ID:nLDE6AH0Z5]

Brewer SABMiller was the top gainer, up 4.8 percent after posting a rise in half-year earnings. [ID:nLDE6AG1CF]

"Results are again showing that while the macro economic picture remains shaky corporates continue to thrive," Jimmy Yates, head of equities at CMC Markets, said.

British Airways climbed 4.1 percent after solid results from Air France-KLM boosted optimism in the sector.[ID:nLDE6AG1P8]

Among second line stocks, QinetiQ rose 10.8 percent after the defence technology firm posted a better-than-expected 14 percent rise in first half profit. [ID:nLDE6AH0A7]

Melrose gained 4.4 percent after the manufacturing buyout firm says trading was ahead of its expectations. [ID:nSGE6AH09C]

Back among the blue chips, Intercontinental Hotels climbed 2.6 percent as Nomura repeated its "buy" stance, ahead of a strategy day on Nov. 23. Nomura said the firm "is well placed to execute on long-term growth strategy."

IRELAND RELIEF

Ireland's willingness to work with a European Union-IMF mission on steps to shore up its banking sector, helped support bank stocks, with Lloyds Banking Group up 2.6 percent. <.FTNMX8350>. [ID:nLDE6AG004]

"There is confidence that the right mechanisms are in place," said Andrew Bell, chief executive of Witan Investment Trust.

U.S. stock index futures pointed to a higher opening for Wall Street on Thursday, reflecting optimism about progress on tackling Ireland's debt crisis.

Across the Atlantic, the latest weekly U.S. jobless claims numbers will be scrutinised at 1330 GMT, with October lead indicators and November's Philly Fed index both due at 1500 GMT.

UK data painted a mixed picture of the economy, with British retail sales volumes picking up in October, while public borrowing hit a record high for the month. [ID:nLDE6AH0TT]

On the downside, outsourcer Capita fell 5.6 percent, topping the blue-chip <.FTSE> fallers list, after the firm's quarterly trading update. [ID:nLDE6AH0DE]

Execution Noble said in a note a lack of new contracts would put downward pressure on 2011 top-line expectations.

Intertek shed 4.6 percent after the testing equipment firm issued a cautious update, prompting Seymour Pierce to cut its rating to "hold". [ID:nSGE6AH09R]

National Grid fell 1.1 percent after posting first-half results. Traders cited doubts about the group's exposure to the United States and a recognition of its strong gains so far this year, as reasons for the fall. [ID:nLDE6AH09J]