The top share index rose on Wednesday, recovering some of the previous session's sharp decline, with beaten down miners and banks leading the way, although volumes were thin and concerns about the global economy limited gains.

London's blue chip index <.FTSE> was up 18.99 points or 0.3 percent at 5,784.79 by 11:49 a.m., having suffered its steepest one-day fall since mid-December on Tuesday as the index dropped through key technical support levels.

What has happened in the last few days is a natural enough unwind of some overbought positions and it's got back to sort of reasonable levels where some people have already started to dip their toes back in, Ian Williams, UK equity strategist at Peel Hunt, said.

He said equity valuations compared to other assets classes remained a compelling argument for the bulls, preventing the index from sustaining steeper losses.

The FTSE All Share index has a trailing yield - based on declared dividend payouts - of around 3.5 percent, compared with gilts on about 2 percent and cash on almost zero, while equity price to earnings valuations at 10.5 times are well below historic averages.

Miners rose, having fallen 9 percent over the previous five trading days, as the relative strength index - a closely-watched technical indicator - suggested the sector was near oversold levels.

Concerns over waning GDP growth in the euro zone, emerging markets and Australia is weighing on sentiment surrounding the outlook for sector earnings, as is the persistent high price of oil.

The risk is that higher oil prices will dampen economic progress, so we are inclined to recommend to move back to a neutral stance on equities, or in the very least reduce overweight equity positions with tactical asset allocation, Gerard Lane, equity strategist at Shore Capital, said.

Banks nudged higher although technical indicators suggest the sector is now fairly valued, having fallen back from gains of more than 23 percent in 2012.

The sector is now up around 17 percent this year as investors wait to see whether Greece's private creditors will agree by Thursday to participate in a bond exchange, a key part of a bailout programme to help Greece manage its wrecked finances and meet a debt repayment on March 20.

INFLATION HOPES

There was some respite for retailers as Bank of England chief economist Spencer Dale was quoted as saying Inflation will continue to fall throughout this year, helping to alleviate the squeeze on household incomes.

Europe's biggest home improvements retailer Kingfisher , upgraded in the previous session by Morgan Stanley, added 1.1 percent, while Wm Morrison Supermarkets climbed 0.2 percent ahead of results due out on Thursday.

Companies that manage to beat market expectations continue to be rewarded by investors, with Admiral Group up 11 percent, buoyed by above-forecast full-year results and an easing of injury claims that forced it to issue a profit warning in November.

Admiral's shares fell 44 percent in 2011, but have rallied nearly 40 percent in 2012.

Admiral shares have already recovered some ground this year, but Prime Markets believes that the results today will in time see the stock recover levels from last summer around 1,500-1,600 pence, Richard Curr, head of dealing at CFD specialists Prime Markets, said.

Our initial target is the recovery of the early November peak at 1,200 pence in the coming 7-10 days, he said.

British aero electronics group Cobham rose 8.1 percent as it boosted its full-year dividend by 33 percent and said it expects to deliver further growth this year after cost cuts and a strong performance from commercial aviation lifted 2011 profit.

With 44 percent of its sales from US defence/security there is clearly still some uncertainty in the outlook for Cobham's top line (though this is reducing). Profitability though has been addressed and the group seems to be making good progress in streamlining the business, Collins Stewart said.

Blue chip defence contractor BAE Systems was up 1.9 percent as the firm hosted an analyst day.

The most likely candidates to leave the FTSE 100 in this week's reshuffle - Essar Energy and Cairn Energy - had a mixed morning, as tracker funds jostled positions ahead of the confirmation later on Wednesday.

Seven blue-chip companies went ex-dividend on Wednesday, including tobacco group BAT and bank Standard Chartered , clipping a total 11.01 points off the FTSE 100 index.

UK gains were supported as Wall Street futures pointed to a rebound later on for U.S. stocks, ahead of Across the Atlantic, the ADP National Employment survey.

(Written by David Brett; Editing by Mark Potter)