* FTSE up 0.8 percent
* Commods rally as dollar wanes, Shell beats forecasts
* AstraZeneca slips as revenues fall
By David Brett
LONDON, Oct 28 (Reuters) - Rebounding commodity stocks powered gains on Britain's top share index on Thursday, as oil major Royal Dutch Shell beat analysts expectations with its third-quarter results.
By 1045 GMT, the FTSE 100 was up 45.16 points, or 0.8 percent, at 5,691.18, recovering after it fell 1.1 percent to 5,646.02 on Wednesday, its lowest closing level since Oct. 5.
Energy stocks were back in favour after falling sharply in the previous session on concerns over the strength of further stimulus packages in the United States.
Shell, up 0.9 percent, beat all analyst forecasts by reporting an 18 percent jump in third-quarter profits thanks to higher oil and gas prices, setting a trend for the sector.
Peer BG Group also added 0.9 percent after saying it had begun production from Tupi, one of its key fields, in the Santos basin off the coast of Brazil.
"Corporate results are helping to fuel optimism among investors, leaving equities in a strong position despite uncertainty over the strength of the global recovery and the extent of further quantative easing (QE) measures," Jimmy Yates, head of equities at CMC Markets, said.
Copper miner Kazakhmys firmed 1.1 percent. The Kazakh miner posted an in-line third-quarter update and reiterated its full-year target as demand remained buoyant.
"Kazakhmys looks on track to meet expectations for 2010 and we believe that recent share price weakness has been overdone," Evolution Securities, which raised its rating to "add" from "reduce", said in a note.
Miners were firmer, aided as investors switched out of the dollar following recent strength on the back of the QE doubts and into commodities.
STORMY WATERS
Analysts expect markets to remain choppy in the run up to the U.S. Federal Reserve's Nov. 2-3 policy-setting meeting.
The latest Reuters survey showed most leading economists expect the Fed to buy between $80 billion and $100 billion worth of assets per month, with estimates for how much it will eventually spend varying from $250 billion to $2 trillion.
U.S. stock index futures pointed to a slight rise when Wall Street opens on Thursday, ahead of weekly U.S. jobless claims data due at 1230 GMT.
British satellite operator Inmarsat rose 2.4 percent as Liberum repeated its "buy" stance and 900 pence target price, saying "the sale by hedge fund Harbinger of half of its stake accounts for much of the stock price's recent weakness".
Top riser was Arm Holdings, up 4.0 percent, with the chip designer bouncing back from a retreat following Q3 results, and with H2O Markets repeating a "buy" rating.
Buyers came in for bank shares ahead of trading statements due over the next couple of weeks.
Royal Bank of Scotland and HSBC, both scheduled to issue updates on Nov. 5, each rose 1.0 percent.
On the downside, AstraZeneca dropped 2.8 percent, as the drugmaker's revenue fell 4 percent in the third quarter, hit by generic competition to key drugs and the absence of last year's windfall sales of swine flu vaccine.
Aggreko was down 2.5 percent. The provider of temporary power raised its full-year outlook again, with JP Morgan staying "neutral" and saying the rating looks full. (Editing by Michael Shields)