Wires

Miners, banks help UK stocks bounce off 1-week lows

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* FTSE up 0.6 pct after three-session losing streak

* Burberry higher after reassuring trading update

* Could bode well for Q3 earnings season

* Two broker downgrades knock WM Morrison

By Jon Hopkins

LONDON, Oct 11 (Reuters) - UK shares bounced back onThursday following early declines, led by banks and miners asinvestors shifted through risk-sensitive stocks for bargains.

Luxury group Burberry jumped 10.5 percent after it reportedsigns of slightly better trading that could bode well for thethird quarter earnings season.

At 1054 GMT, the FTSE 100

was up 35.72 points, or0.6 percent, at 5,812.73, rallying after reaching its lowestlevel since Oct. 1 early on, and looking to snap a three-sessionlosing streak.

Mining stocks, supported by a firmer copperprice

amid hopes that top metals consumer China couldlaunch fresh stimulus measures, rose more than 1 percent. Thesector hit two-week lows on Wednesday.

Banks were also higher.Burberry

, which issued a profit warning last monthin part due to concerns over growth in China, was the top gainerafter the checked raincoat designer saw an improvement intrading in September.

"I think these (data) ...confirm it was slightly oversoldgiven the profits warning the other day. I would look to run itup now, I have taken some profit now and have left some foranother move up," said Dan Reed, a broker at HB Markets.

A downgrade of Spain's credit rating after Wednesday'smarket close by Standard & Poor's to just above junk status waslargely shrugged off by UK investors.

The news hit Spanish shares and pushed up its bond yields,but other markets chose to focus on speculation that Madrid maynow come under more pressure to formally ask for financial help,kick-starting the European Central Bank's bond-buying plan andhelping haul the region out of the mire.

"I think that hope is what investors are focusing on,although really there is no surprise in the S&P move, it justratchets up the pressure on the Spanish government," said PaulKavanagh, chairman of Killik & Co's capital division.

MORRISON MAULEDWM Morrison

was the biggest blue chip faller, down1.5 percent after two broker downgrades impacted Britain'sfourth-biggest food retailer, according to traders.

Credit Suisse reduced its rating for Morrison to "neutral"from "outperform", citing valuation grounds, while EspiritoSanto Investment Bank cut its stance on the stock to "sell" from"neutral" and trimmed its 2013 profit forecast.

The main drag on blue chip sentiment, however, came fromother defensive stocks, which are seen as less exposed to thevagaries of the economic cycle, as investors' risk appetitewidened, with drugmakers, brewers, food producers, and utilitiesamong the worst off.

(Reporting by Jon Hopkins; Editing by John Stonestreet)

((jon.hopkins@thomsonreuters.com)(02075428954)(Reuters

Messaging: jon.hopkins.thomsonreuters.com@reuters.net))

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