Britain's FTSE rebounds as battered mining stocks rally

* FTSE rises in choppy trading session

* Oil prices recover, lifting commodity stocks

* Higher diamond sales boost Anglo American (LSE: AAL.L - news)

By Sudip Kar-Gupta

LONDON, Jan 26 (Reuters) - Britain's top share index recovered ground on Tuesday as a rebound in oil prices and a rally in battered mining stocks lifted the market.

The blue-chip FTSE 100 index was up 0.5 percent at 5,902.90 points just before the close of trading, although the index remained down 5 percent since the start of 2016.

Concerns about a slowdown in China, the world's No. 2 economy and a major consumer of oil and metals, have hit world stock markets since the start of the year, with the FTSE 350 Mining Index down 10 percent.

However, oil prices rose on Tuesday on the prospect that major producers may be edging closer to a deal to tackle one of the biggest supply gluts for decades.

The recovery in oil lifted the shares of energy companies such as BP and Royal Dutch Shell (Xetra: R6C1.DE - news) .

Mining stocks also surged, with Anglo American rising more than 10 percent on the back of higher diamond sales at its De Beers division, while firmer copper prices also supported the sector.

MB Capital director Marcus Bullus said his outlook was positive because outside the volatile commodities sector there were solid results, such as higher profits at housebuilder Crest (BSE: CREST.BO - news) Nicholson.

"I'd looking to go with the upside momentum but maybe with a stop/loss at 5,640 points if the FTSE started to fall back down again," he said.

The FTSE remains nearly 20 percent below a record high of 7,122.74 points reached in April (LSE: 0N69.L - news) 2015. (Additional reporting by Kit Rees; Editing by Louise Ireland)