* FTSE chalks up 4th day of gains as investors bet on stimulus
* Index on track for best weekly gain since January
* M&S boosted as results drive out sellers
By Francesco Canepa
LONDON, April 11 (Reuters) - Britain's top share index rose for the fourth consecutive day on Thursday, helped by a surge in retailer Marks & Spencer (Other OTC: MAKSY - news) and financial stocks as well as by strong data on the U.S. economy.
The FTSE 100 rose 28.77 points, or 0.5 percent, to 6,416.14 points, having extended gains in the afternoon after better-than-expected jobless claims data from the United States, the world's largest economy.
Recent U.S. labour data had been disappointing, sending the FTSE to a two-month low last Friday. Traders said investors were buying on market dips on expectations that the U.S. Federal Reserve keep its economic stimulus programme going.
The FTSE is up 2.7 percent since last Friday, setting it on track for its best weekly percentage since January.
"Those moments of panic are opportunities for those who have missed the preceding rally to reinforce (their positions). Over the medium term you're going to see continuous upside pressure in the equities space."
Hammond said financial shares were in demand as investors looked for relatively cheap shares that tend to outperform a rising market.
Trading at 0.9 times their book value, banks were the cheapest stock in Britain, Thomson Reuters data showed.
Financial shares were the biggest boost to the FTSE on Thursday, adding 6.4 index points.
M&S TOP GAINER
Topping the FTSE 100 was Mark & Spencer, which rose 4.3 percent in volume twice its average after the retail chain posted a smaller-than-expected fall in quarterly sales.
Traders said investors have been closing their negative bets, or "shorts", on M&S but sentiment on the stock remained negative given the ongoing weakness of its clothes business.
"I'm not sure it's necessarily people turning positive on the story, but there was short-covering going on ahead of the results, and the last few shorts have been squeezed out this morning," CMC Markets head of UK sales trading Matt Basi said.
"I wouldn't be surprised to see that (trend) turn over the rest of the week."
Short sellers borrow securities with a view to selling them, betting that they will be able to buy them back later at a lower price before returning them to the lender and keeping the difference.
Short interest in M&S, as measured by the proportion of its shares outstanding on loan, was close to its year low at 2.7 percent before the results, having fallen nearly one percentage point since mid-March, Markit data showed.
Nevertheless, short interest in M&S was more than twice the average for all shares in the FTSE 100 index, showing that underlying sentiment towards the retailer remains negative.
Also supporting sentiment was data showing greater-than-expected money supply growth in China, a key importer of consumer goods and especially luxury products.
Shares in premium brand Burberry rose 3 percent.
Basic resources (Frankfurt: A0JC0X - news) stocks curbed gains on the FTSE, shaving off 6 index points as the sector succumbed to a bout of profit taking after a 4.8 percent gain in the previous three sessions, helped in part by strong Chinese imports data.
Leading the fallers was Russia-focused steelmaker Evraz , which dropped 11.4 percent after reporting a surprise 2012 loss and cautioning on its outlook. (Editing by Hugh Lawson)