By 8:55 a.m. the FTSE 100 was up 42.59 points at 5,079.80 having closed 1.3 percent weaker on Tuesday dented by a sharp sell-off in banks after a shake-up at part-nationalised Royal Bank of Scotland and Lloyds Banking Group .

After the sharp retreat on Tuesday, banks gave a big lift to the index Wednesday, with investors re-evaluating the climate for the sector following the 31 billion pounds in funding from the government agreed for Lloyds and RBS.

Royal Bank of Scotland and Lloyds Banking Group added 3 and 2.1 percent respectively, while Barclays , HSBC , Standard Chartered gained 1.1 to 2.6 percent.

Elsewhere among financials, insurer Aviva was up 4.7 percent shrugging aside results that were slightly below forecast, as investors reacted positively to its solvency position.

Miners also recovered some of the previous session's heavy losses, with metal prices climbing.

Rio Tinto , Xstrata , Lonmin , Anglo American , Kazakhmys and Fresnillo added 1.1 to 3.9 percent.

MARKS SPARKLES

Iconic high street retailer Marks & Spencer was the biggest blue-chip gainer, up 6.1 percent after it reported flat first half profits towards the top end of expectations as tight management of costs and stock offset weak sales.

Rival retailer Next added 3.6 percent after it reported better than expected third-quarter sales and upgraded its sales and profit guidance for the balance of the year.

Also hinting that the outlook is brightening on the high street, consumer morale has hit its highest levels in the last two months since April 2008, the Nationwide Consumer Confidence Index showed.

Shop prices were flat in October compared with a year ago after falling in the previous two months, the British Retail Consortium said.

Permanent job placements in Britain grew for a third consecutive month in October and at the fastest pace in two years, a survey by the Recruitment and Employment Confederation and accountancy firm KPMG showed.

Investors will look at the UK CIPS services PMI report for October, due for release at 9:28 a.m., with the headline PMI number seen rising to 55.5, up from September's 55.3.

The latest Bank of England Monetary Policy Committee meeting starts on Wednesday, decisions from which are due on Thursday.

No change to interest rates is expected but an increase in the bank's quantitative easing policy is anticipated.

Investors' attention will also be drawn across the Atlantic. After the UK market close, the spotlight will fall on the U.S. Federal Open Market Committee meeting result, scheduled for 7:15 p.m., with interest rates expected to be kept close to zero.

Ahead of that investors will watch the U.S. ADP employment survey, which may give some clues as to what will happen with Friday's October nonfarm payrolls data.

Pharmaceutical stocks were weaker as investors shunned stocks seen as more defensive in a rising market. AstraZeneca lost 0.2 percent and GlaxoSmithKline , which also traded ex-dividend on Wednesday, fell 1.2 percent.

Overall, ex-dividend factors knocked 9.40 points off the index on Wednesday, with Intertek Group and Royal Dutch Shell also losing their dividend attractions. (Reporting by Simon Falush)