Britain's FTSE posts biggest weekly gain since mid-April

(ADVISORY - Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details)

* FTSE 100 index closes 0.1 percent higher

* Posts biggest weekly rise since mid-April

* Royal Mail (LSE: RMG.L - news) leads market higher

By Atul Prakash and Alistair Smout

LONDON, May 27 (Reuters) - Britain's FTSE 100 ended slightly firmer on Friday, led higher by Royal Mail, with the blue-chip index posting its biggest weekly gain for six weeks.

The benchmark index finished up 0.1 percent at 6,270.79 points, a fourth straight day of gains. The commodity-heavy index rose nearly 2 percent this week, buoyed by an oil price rally to more than $50 a barrel for the first time this year, as well as a rise in banks.

Shares (Berlin: DI6.BE - news) in Royal Mail rose more than 2 percent, the top gainer in the FTSE 100 index, with traders saying that the stock was helped by a read-across from a report of a possible merger between Belgian and Dutch mail operators Bpost (Other OTC: BPOSF - news) and PostNL (Swiss: PN6.SW - news) .

Royal Mail was also buoyed by news that the Unite employees union had cancelled its proposed strike action. The news followed this week's ruling from Britain's telecom regulator Ofcom saying it would not impose new price controls on the company's wholesale or retail products, citing the declining letters market and increased competition in parcels.

"Royal Mail is rounding out the session at the top of the pile, with that mid-week ruling by Ofcom evidently still delivering for the firm," Tony Cross, analyst at Trustnet Direct, said. "It (Other OTC: ITGL - news) 's the miners who are struggling once again."

The UK mining index fell 1.3 percent amid lingering concerns about global metals demand. Shares in Anglo American, Antofagasta (Other OTC: ANFGF - news) and BHP Billiton (NYSE: BBL - news) declined 1.4 to 2.7 percent.

Energy shares also fell as oil markets slipped around 1 percent, retreating from seven-month highs, as traders weighed the prospect of crude production intensifying because of prices near $50 a barrel.

The UK energy index fell 0.6 percent, dragged down by a 0.7 percent and 0.5 percent fall in BP and Royal Dutch Shell (Xetra: A0ET6Q - news) respectively.

"We've had a decent move upwards over the last week or so, helped by the rise in crude above 50 bucks. But if some of these commodity-related stocks and financials start to tail back off again, then the overall market could drift heading into the weekend," TJM Partners head of trading, Manoj Ladwa, said.

ADVISORY - Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

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Mike Dolan, Markets Editor EMEA. (Editing by Mark Heinrich)