FTSE inches higher as rate cuts settle nerves

* FTSE 100 gains 0.15 percent early

* Energy stocks fall despite higher oil price

* Miners boosted by higher metals prices

(For more on the financial turmoil, click on [nCRISIS])

By Simon Falush

LONDON, Oct 30 (Reuters) - Britain's leading share index rose slightly on Thursday as positive sentiment driven by interest rate cuts was offset by worries that they would still not be enough to head off a global recession.

By 0921 GMT the FTSE 100 .FTSE was up 6.33 points, or 0.15 percent at 4,248.87 after gaining 8.1 percent on Wednesday, on track for its best week since September 2001.

However the index is still down 13.2 percent in October, and heading for its worst month since 1987.

Asian stocks surged broadly with Japan's Nikkei 225 .N225 up 10 percent after China, Hong Kong, Norway and Taiwan cut interest rates in the wake of a widely expected 50 basis point cut from the U.S. Federal Reserve to leave rates at 1 percent.

"There's a slight change in sentiment and the main show in town is interest rate cuts," said Richard Hunter, head of equities at Hargreaves Lansdown.

Miners continued their recovery after steep gains on Wednesday as metal prices also benefited from improving risk appetite.

Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz) gained 6 percent after it reported third-quarter results in line with guidance while Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) added 4.6 percent after it maintained its forecasst on full-year 2008 copper production.

Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), and Eurasian Natural Resources (ENRC.L: Quote, Profile, Research, Stock Buzz) added between 5.7 and 9.9 percent.

Heavyweight energy stocks were in negative territory, despite oil rising to nearly $70 a barrel CLc1, with Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) down 2.9 percent after its third-quarter earnings came in at $10.9 billion, up from $6.4 billion a year ago. [ID:nWLA1549]

BP (BP.L: Quote, Profile, Research, Stock Buzz) was down 1.3 percent but Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) gained 6.7 percent.

A reminder that the economic backdrop is still bleak came from Nationwide property data which showed house prices fell 0.5 percent this month, weighing on banks.

"No one's under any illusions that (rate cuts) are an overnight cure for the problems that the market is facing but with Libor (inter-bank lending) rates edging lower it is easing some of the logjam," Hunter said.

Bank of England policymaker David Blanchflower said the credit crisis could turn out to be more far-reaching even than the 1929 crash and big interest rate cuts are needed to avoid a deep recession. [ID:nLT596420]

Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) gained 0.7 percent, HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) put on 1.5 percent and Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) added 2.6 percent but HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) fell 0.5 percent.

Britain's finance minister Alistair Darling said the UK is moving into recession and the government will need to spend more and forget about its self-imposed limits on borrowing for the time being. [ID:nLT541230]

Defensive tobacco and pharmaceuticals stocks fell as investors edged back into higher risk assets.

British American Tobacco (BATS.L: Quote, Profile, Research, Stock Buzz) fell 3.6 percent while GlaxoSmithKline (GSK.L: Quote, Profile, Research, Stock Buzz) lost 1.7 percent.

Standard Life (SL.L: Quote, Profile, Research, Stock Buzz) was down 4.5 percent after it said its slaes were flat for the first nine months of 2008 and its UK life and pensions sales were down 5 percent.

WPP (WPP.L: Quote, Profile, Research, Stock Buzz), the world's second largest advertising company, fell 3.2 percent after it predidicted 2009 would be a very tough year while reprting third quarter revenue growth in line with forecasts. (Editing by Greg Mahlich)