* FTSE 100 index leaps 1.6 percent
* Energy issues advance as crude holds above $91.50
* Miners bolstered by firmer metal prices
* Banks bounce; RBS helped by Exane upgrade
By Jon Hopkins
LONDON, Jan 4 (Reuters) - Britain's FTSE 100 leapt higher on the first session of 2011, bouncing back after a late sell-off on New Year's Eve, driven by strength in heavyweight commodity issues and banks.
At 0902 GMT, the FTSE 100 index was up 96.65 points, or 1.6 percent at 5,996.59, having breached the 6,000 level once again in opening deals, recouping all of the 1.2 percent drop it registered on Dec. 31.
"It's a storming start to 2011 after the New Year's Eve disappointment, with commodities extending their strength and banks bouncing too," said Mic Mills, head of electronic trading at ETX Capital.
"Volumes aren't great, but building, and all that pent-up energy after the long holiday break has burst through, though whether it will last is anyone's guess," added Mills.
Energy stocks provided the main support for the British blue chip index as crude hovered around its highest price in nearly two years.
BP was the best sector performer, up 4.4 percent. Royal Dutch Shell weighed an opportunistic takeover bid for crisis-hit BP during the Gulf of Mexico spill, but pulled back from making an offer due to fears over uncapped legal liabilities, the Daily Mail said on Tuesday.
Royal Dutch shares gained 0.8 percent.
Miners saw strong demand as copper prices hit a record high in London buoyed by positive global manufacturing data, with Xstrata standing out, up 3.5 percent.
On Monday, data from the U.S. showed manufacturing sector grew for a 17th consecutive month in December, while U.S. construction spending increased in November to its highest level since June. For details, see
Meanwhile China's factory inflation cooled in December, while manufacturing in Europe accelerated.
Silver miner Fresnillo was the top blue chip gainer, up 5.2 percent, extending a strong run, but Randgold Resources missed out, losing 0.7 percent as the price of gold marked time after a strong run, weighed by a firmer dollar.
BANKS BUOYANT
Worries over euro zone debt exposure faded further into the background helping banks bounce higher, with Royal Bank of Scotland up 4.4 percent, and Barclays ahead 2.9 percent.
RBS also found support from an Exane BNP Paribas upgrade to "outperform", with the French broker saying a sharp sell-off induced by the bank's exposure to debt crisis-hit Ireland presents a buying opportunity.
Among individual blue chip gainers, chip designer ARM Holdings, up 4 percent, saw a resurgence of vague bid speculation give it a boost at the start of the year.
But automotive parts firm GKN was the top FTSE 100 faller, down 1.8 percent as recent bid speculation faded and tracking falls in the European automobiles sector.
Defensively-perceived issues were the other main blue chip fallers as investors' risk appetite returned, with contract caterer Compass Group down 1.1 percent and food producer AB Foods down 0.4 percent.
(Editing by Hans Peters)