FTSE gains 1.8 percent, BP results lift sentiment

* FTSE 100 up 1.8 percent

* Strong results from Aviva, BP lift sentiment

* Firmer commodity prices lift energy, miners


By Simon Falush

LONDON, Oct 28 (Reuters) - Britain's leading index of shares rose 1.8 percent early on Tuesday, tracking late gains in Asian equity markets as investors seized on healthy corporate profits as a reason to buy heavily sold stocks.

By 0837 GMT the FTSE 100 .FTSE was up 69.66 points at 3,992.25 after closing down 0.8 percent on Monday.

Shares in Asia jumped in late trading, recovering from heavy losses on Monday but U.S. stocks closed at their lowest level in 5-1/2 years as worry about the severity of a global recession and a bleak outlook for profits gripped investors.

Heavyweight BP gained 4.7 percent after it beat all forecasts and reported a 148 percent rise in third-quarter replacement cost profits compared with the same period in 2007, to a record $10.0 billion thanks to higher oil prices.

Other oil producers joined BP in positive territory with crude CLc1 erasing early losses to rise above $64. Cairn Energy gained 4.9 percent, Royal Dutch Shell added 1.5 percent while Tullow Oil added 1.3 percent.

"All the important numbers have been strong this morning, BP released belting results and Aviva results were reassuring," said Jim Wood-Smith, head of research at Williams de Broe in Exeter.

"The news has been so unrelentingly miserable over the last few weeks that there's every chance of a random bounce, and this looks like it."

British life insurer Aviva reported a better than expected 12 percent rise in its 9-month sales, and confirmed that it may renegotiate a 1 billion pound payout to customers as a result of weak financial markets. It rose 13.5 percent.

Heavily sold banks were also strong gainers after the Bank of England said in its twice-yearly Financial Stability report that global intervention should steady the financial system but will also put big constraints on banks.

HSBC , Standard Chartered , Royal Bank of Scotland and HBOS added between 2.1 percent and 6.6 percent.

Miners also snapped a heavy losing streak as metal prices recovered ground after steep falls in recent days.

Anglo American , BHP Billiton , and Rio Tinto added between 3.7 percent and 7.6 percent.

Kazakhmys and Eurasian Natural Resources underperformed other miners after Kazakh Industry and Trade Minister Vladimir Shkolnik said the companies are reducing output due to the global economic turmoil.

ENRC fell 3.6 percent while Kazakhmys gained 1.9 percent.

The Federal Reserve begins a two-day meeting ahead of a decision on interest rates at which it is expected to cut interest rates by 50 basis points FEDWATCH.

Speculation about the outlook for global monetary policy also heightened after European Central Bank President Jean-Claude Trichet said on Monday the ECB could cut rates at its November meeting.

(Editing by Sharon Lindores)