Britain's leading shares bounced into positive territory on Wednesday, reversing direction from initial losses as consolidation hopes in the utility sector boosted stocks such as International Power, while insurer Friends Provident, rose after an analyst upgrade and financials generally added support.

Mining stocks remained weak, however, with Anglo American, Rio Tinto and BHP Billiton all lower. Stocks trading ex-dividend also continued to come under pressure, including retailer Boots and utility group Scottish Power.

By 0916 GMT the FTSE 100 index was up 34.4 points, or 0.6 percent, at 5,686.4 -- swinging higher from a session trough of 5,591.5 points. Gains in the banking sector accounted for around half of the move, followed by telecoms and insurers. Total turnover reached just over 540 million shares.

The numbers that have come out from the Bank of England look good as far as calming interest rate nerves here is concerned, said one trader of the rebound.

BoE data showed unsecured lending rebounded in April but growth remained subdued, suggesting Britons are finally tiring of taking on ever more debt. Figures also showed British mortgage approvals falling to their lowest level in seven months, a sign that the recent revival in the housing market may ease over the coming months.

More economic indicators are due out later in the session, climaxing with the minutes from the U.S. Federal Reserve's May 10 meeting at 1800 GMT, which could offer clues on whether interest rates in the world's biggest economy will continue to rise.

Markets around the world were hit on Tuesday as the U.S. dollar fell heavily, prompting concerns about earnings at companies with operations in the world's biggest economy, and as worries about inflation and interest rates continued to haunt investors.

Despite recovering from its opening drop, the FTSE 100 is down nearly 6 percent in May, on track for its heaviest monthly drop since January 2003.

UTILITIES ENERGISED

Shares in International Power and other power companies dominated the blue-chip leaderboard as dealers cited renewed bid speculation in the sector after U.S. power firm NRG rejected an $8 billion offer from rival Mirant.

International Power, British Energy and mid-cap Drax all rose over 3 percent.

Insurer Friends Provident was a talking point as well, up 3 percent after an upgrade to outperform from Credit Suisse.

We believe the market is undervaluing the growth and profitability prospects of the international 'offshore' life insurance business, analysts at the bank said.

On the downside, jewellery retailer Signet lost 2.3 percent after Lehman cut its rating on the stock to underweight and as shares in the mid-cap listed group traded ex-dividend. (Additional reporting by Matt Falloon)

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