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UPDATE 1-Britain's FTSE rebounds as commodities stocks recover

* FTSE 100 up 1.2 pct at close

* Fortnight of market stress wiped 147 bln off FTSE 100

* BAML upgrade pushes Victrex up

* Acacia Mining sinks 8 pct after scrapping dividend (Updates prices at close)

LONDON, Feb 12 (Reuters) - British shares rebounded on Monday after a tough week, thanks to a relief rally in commodities stocks.

But with market volatility tipped to stay elevated, investors were divided over whether to buy the dip.

The FTSE 100 was up 1.2 percent at 7,177.06 points at its close, regaining some of last week's losses but still near a 13-month low. Some 147 billion pounds was wiped off the leading UK stock index in the past two weeks as heady markets nosedived.

Energy, materials and financials gave the index its biggest boost as the cyclical stocks that had suffered the worst losses last week led the gains.

Oil majors Royal Dutch Shell and BP both rose around 2 percent, as crude prices also recovered from last week's declines.

Miners Anglo American, Glencore, BHP Billiton and Rio Tinto were among the biggest gainers, with steel producer Evraz top of the FTSE, up 5.8 percent, as metals prices rose.

Some investors said they were staying on the sidelines while the market mood developed.

"If anything, we will be looking to sell into rallies rather than buying into dips," said Daniel Lockyer, senior fund manager at Hawksmoor Investment Management.

"What's changed, I think, is the psychological element of markets where just a month ago everyone thought it was a market that only went up and volatility always stayed low. You just needed to have a couple of down days and spikes in the VIX to change that mentality."

While many recommended "buying the dip" in stocks last week, arguing growth remained strong and European valuations were still attractive, investors seemed reluctant to make assertive bets with volatility still high.

"We will wait a few more days to see where markets will stabilise before implementing an overweight in our portfolios," said Valentin Bissat, European equity strategist at Mirabaud Asset Management. He remained supportive on equities.

The FTSE 250 gained 0.8 percent, with some big moves on broker notes and results.

Victrex shares jumped as much as 5.5 percent after the mid-cap polymer firm got a double upgrade from Bank of America Merrill-Lynch to 'buy'.

Tourism and insurance group Saga gained 3.7 percent after it said it had signed a quote share deal with NewRe and German reinsurer Hannover Re .

Bucking the trend in the mining sector was Acacia Mining , down nearly 4 percent after scrapping its 2017 dividend.

Tanzania's largest gold miner also said full-year core earnings dropped by more than a third due to a ban on unprocessed mineral exports in the country.

Small-cap UP Global Sourcing sank 47.5 percent after a trading update which Shore Capital analyst Darren Shirley called 'disappointing".

(Reporting by Helen Reid and Kit Rees, editing by Larry King)