Britain's FTSE rebounds as oil shares bounce off lows

* FTSE 100 up 0.6 pct

* Oil bounces off 5-1/2 year low

* Tullow, Petrofac and BG among top risers

By Alistair Smout

LONDON, Dec (Shanghai: 600875.SS - news) 15 (Reuters) - Britain's top share index rose on Monday, rebounding after its biggest weekly fall in over three years, as energy stocks bounced from multi-year lows to track the oil price higher.

Oil-related stocks gained after Brent crude rebounded from fresh 5-1/2 lows hit earlier on Monday. They added 21 points to the FTSE 100, accounting for most of the index's rise.

The FTSE was up 39.81 points, or 0.6 percent, at 6,340.44 by 0908 GMT, after falling 6.6 percent last week.

The FTSE is down 5.8 percent in December, hindered by its heavy weighting in oil stocks. While a lower oil price can support other sectors, there are increasing signs that a weakening global economy could hinder demand for oil at a time of already ample supply.

"The template is still in place: oversupply and dwindling demand mean that the pressure will still be on oil. However, there's a lot of pessimism over the oil price which has already been factored in to the equity market," Alastair McCaig, market analyst at IG (LSE: IGG.L - news) , said.

Tullow Oil (LSE: TLW.L - news) was up 5.2 percent, after hitting its lowest since November 2008, and BG and Petrofac both rose around 3 percent, bouncing from their lowest levels since 2009.

Some traders said that M&A activity would help support the sector.

French oil services group Technip (Paris: FR0000131708 - news) surged after it ruled out a bid for CGG (NYSE: CGG - news) but Atif Latif, director of trading at Guardian Stockbrokers, said that valuations looked cheap compared to the asset value of several firms in the sector.

"We see the potential for M&A to become more the preferred play for majors," Latif said.

"This is a cheap way to gain exposure to companies that continue to hold sound assets that have been sold off in line with the oil price." (Editing by Susan Fenton)