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

* 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 on Thursday following early declines, led by banks and miners as investors shifted through risk-sensitive stocks for bargains.

Luxury group Burberry jumped 10.5 percent after it reported signs of slightly better trading that could bode well for the third quarter earnings season.

At 1054 GMT, the FTSE 100

was up 35.72 points, or 0.6 percent, at 5,812.73, rallying after reaching its lowest level since Oct. 1 early on, and looking to snap a three-session losing streak.

Mining stocks , supported by a firmer copper price

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

Banks were also higher. Burberry

, which issued a profit warning last month in part due to concerns over growth in China, was the top gainer after the checked raincoat designer saw an improvement in trading in September.

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

A downgrade of Spain's credit rating after Wednesday's market close by Standard & Poor's to just above junk status was largely 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 may now come under more pressure to formally ask for financial help, kick-starting the European Central Bank's bond-buying plan and helping 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 just ratchets up the pressure on the Spanish government," said Paul Kavanagh, chairman of Killik & Co's capital division.

MORRISON MAULED WM Morrison

was the biggest blue chip faller, down 1.5 percent after two broker downgrades impacted Britain's fourth-biggest food retailer, according to traders.

Credit Suisse reduced its rating for Morrison to "neutral" from "outperform", citing valuation grounds, while Espirito Santo 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 from other defensive stocks, which are seen as less exposed to the vagaries of the economic cycle, as investors' risk appetite widened, with drugmakers, brewers, food producers, and utilities among 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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