Miners help Britain's FTSE to rebound after China stimulus boost

* FTSE 100 up 1 pct

* Mining sector gains 1.9 to be top riser

* IHG benefits from continued merger chatter

* Ashtead boosted after Barclays (LSE: BARC.L - news) raises target price

By Alistair Smout

LONDON, April 20 (Reuters) - Mining stocks helped Britain's top share index rebound on Monday, benefiting from stimulus measures in China to support stuttering growth in the world's biggest consumer of metals.

The FTSE 350 mining sector rose 1.9 percent, the top sectoral gainer after China cut the amount of cash that banks must hold as reserves to help combat a slowdown in growth in the world's second-biggest economy.

The blue-chip FTSE 100 rose 64.77, or 0.9 percent, to 7,058.40 points by 0806 GMT, partly recovering from a 1.3 percent drop on Friday.

While the index climbed back above the psychologically significant 7,000 level, it remained 0.9 percent off an all-time high touched in the previous session.

Although the stimulus from China helped support commodity prices, Chinese stocks reversed initial gains, leaving some in the market wary about the prospects for Britain's top shares.

"China is the key story that is driving the FTSE today," Chris Beauchamp, market analyst at IG (LSE: IGG.L - news) , said. "The key is whether we can hold these gains. I'm not confident just yet that this is much more than a bounce after last week's drop, especially given the weak finish in China today."

Following Friday's fall, gains were broad-based, with other growth-sensitive sectors such as banks and oil and gas stocks also rallying.

In all, financial, energy and basic materials stocks added 30 points to the FTSE 100.

The top individual riser was InterContinental Hotels Group , up 3.3 percent, with traders citing merger chatter after speculation of a possible deal broke in late trade on Friday.

Construction firm Ashtead gained 2.4 percent, rallying to 1,139p after Barclays raised its target price on the stock to 1,405p from 1,289p.

The stock has fallen 1.1 percent so far this year.

"We believe the relative share price weakness year-to-date offers an attractive opportunity given the strong earnings growth we forecast over the next few years," analysts at Barclays said in a note. (Editing by David Holmes)