Commods lead FTSE rebound as BP rises on well kill

* FTSE up 1.2 percent

* Commods gain, BP rises on well kill

* Food retailers higher, Bernstein sees inflation boost

By David Brett

LONDON, Sept 20 (Reuters) - Britain's top shares extended gains by midday on Monday, led by energy shares after BP permanently killed its deep-sea well in the Gulf of Mexico.

By 1039 GMT, the FTSE 100 <.FTSE> was up 63.51 points, or 1.2 percent, at 5,571.96, rallying on recent falls, albeit in thin trade with volumes at just 21 percent of their 90-day average.

London's blue chips closed 0.6 percent lower on Friday, it's third straight session of losses, hurt by weak economic data from the United States and worries over Ireland's finances.

"We're seeing a continuation of the risk-on risk-off strategy from investors," Jimmy Yates, head of equities at CMC Markets, said.

He said the FTSE was priming itself for a second attack on the significant 5,610 resistance level, having briefly flirted with it on Friday before falling away sharply.

BP rose 1.7 percent after the top U.S. oil spill official said on Sunday that the oil major had permanently "killed" the Gulf of Mexico well that ruptured in April and unleashed the worst oil spill in U.S. history. [ID:nN19215397]

Energy stocks <.FTNMX0530> were the top performers on the FTSE. British oil services and engineering group Amec rose 1.8 percent, with Liberum Capital initiating coverage on the firm with a "buy" rating.

Miners <.FTNMX1770> tracked base metal prices higher, as gold edged close to a record high with investors keen on the commodity as speculation remained of more quantitative easing in the United States, following the weak data on Friday.

Precious metal miner Fresnillo added 0.7 percent.

FOOD RETAILERS RISE

UK food retailers J Sainsbury , Wm Morrison Supermarkets and Tesco climbed 1.8-2.1 percent after an upbeat note on the sector from Bernstein.

Bernstein said in a note: "The year to date rerating of the (European food retail) sector only brings it in line with historic averages; we expect further support from inflation and increase price targets across the sector."

Testing equipment firm Intertek Group was the top riser, up 3.0 percent after Seymour Pierce raised its rating to "outperform" from "hold" as a read across from Swiss peer SGS's bullish update.

London's gains were underpinned by U.S. stock index futures pointing to a firmer open on Wall Street.

Investors were focused on Tuesday's Federal Reserve interest rate decision, though the U.S. central bank is not expected to make any new monetary policy moves.

However, the post-meeting statement will be closely read for signals on the debate about whether further large-scale asset purchases are needed to support the sluggish recovery.

"There is still an underlying feeling in the bond market that we will get further quantitative easing in the not too distant future," Keith Bowman, analyst at Hargreaves Lansdown said.

Banks <.FTNMX8350>, which are sensitive to slight changes in risk appetite, were higher, with Barclays , Lloyds Banking Group and RBS.L up from 1.4 to 1.6 percent, all helped by target price upgrades from JPMorgan Cazenove.

Top FTSE fallers were recent arrivals pump manufacturer Weir Group and insurance buyout vehicle Resolution , which fell 1.4 and 2.1 percent respectively, after a strong run prior to their entry to the FTSE 100 at the index's latest reshuffle. (Editing by Jon Loades-Carter)