Britain's top share index bounced higher by midday on Wednesday, with banks and miners rallying on hopes the International Monetary Fund would bolster its lending resources significantly to insulate economies from Europe's debt crisis.

London's blue-chip index <.FTSE> was up 8.49 points, or 0.2 percent at 5,702.44, by 1139 GMT, rebounding from a session low of 5,647.92, although the index failed to significantly breach resistance around 5,700.

Banking <.FTNMX8350> and mining <.FTNMX1770> shares, the riskiest equities on the UK's benchmark index, recovered losses after a media report said the IMF was looking at a possible $1 trillion (650 billion pounds) expansion of its lending facility to help safeguard the global economy from the euro zone's debt crisis.

There is a huge wave of liquidity that the market is expecting to hit, and as a result we're seeing equities and commodities rallying on the back of it, David Morrison, strategist at GFT Global, said.

We know the Bank of England is likely to introduce further quantitative easing in February ... There's talk of the European Central Bank extending its long-term refinancing operations dramatically and there is still the possibility the (U.S.) Federal Reserve may do something in the early part of this year to provide further stimulus.

Banks, which have large exposure to Europe's debt woes, initially opened lower after U.S. peer Citigroup reported weaker-than-expected earnings, blaming Europe's debt crisis for hindering its turnaround plans.

So the IMF report lifted sentiment in the sector, whose earnings outlook relies heavily on the survival of the European Union.

Royal Bank of Scotland , down more than 2 percent early on, climbed 0.3 percent by midday.

There was also relief after Germany saw good demand, and yields fall, at its most recent bond auction, while debt-laden Portugal also saw borrowing costs fall.

Other financials rallied too, with insurance buyout vehicle Resolution up 2.1 percent and Schroders 1.9 percent higher.

Man Group rose 5.4 percent as the funds firm reported a slowdown in the pace of outflows in its fourth-quarter trading statement.

Traders said Man's shares had priced in much of the bad news, having lost more than a third of their value over the last three months.

DEFENSIVES DOWN

As investors reflected on the more positive media reports on the IMF, those stocks perceived as defensive fell slightly, although FTSE 100 volume was low -- just 30 percent of its 90-day average -- highlighting traders' lack of conviction.

Utilities SSE and Centrica each shed 0.8 percent, while British American Tobacco was down 0.7 percent.

Cigarette maker Imperial Tobacco , the only U.K. blue-chip company to go ex-dividend on Wednesday, clipped 2.63 points off the FTSE 100 index.

Tullow Oil was down 4.5 percent as the oil explorer's latest trading update flagged a production decline, with net asset values (NAV) likely to fall as a result.

Essar Energy , however, recouped some of the previous session's sharp fall.

It rose 10.3 percent after saying it expects to challenge a ruling by India's Supreme Court that means it will no longer be able to defer payment of a sales tax, having hitherto benefited from deferrals of $1.24 billion.

Elsewhere, BT Group shed 0.6 percent as UBS downgraded the telecoms firm to neutral from buy, citing concerns over valuation, competition and the firm's pension.

Pay-TV broadcaster BSkyB , which also offers broadband and telecom services, was up 1.6 percent.

British publisher Pearson
shed 1.4 percent ahead of a trading update due on Thursday.

Wall Street futures pointed to a higher open on Wednesday, supporting the turnaround on the FTSE 100, ahead of a raft of data including: the producer prices index, due at 1330 GMT; industrial output data for December, due at 1415 GMT; and the U.S. homebuilder sentiment index.

(Editing by David Hulmes)