Airlines lead bounce in Britain's FTSE as oil prices fall

* FTSE 100 edges higher but still 8 pct below record highs

* Greece defaulted on IMF loan overnight

* Airlines boosted by Heathrow decision and lower oil price

By Sudip Kar-Gupta

LONDON, July 1 (Reuters) - Britain's top equity index bounced back from five-and-a-half month lows on Wednesday, lifted by airline stocks that were boosted by lower oil prices and a recommendation to build a new runway at London's Heathrow airport.

But persistent concerns over Greece - which overnight became the first developed economy to default on a loan from the International Monetary Fund (IMF) - kept the market well below its earlier 2015 highs.

The blue-chip FTSE 100 index was up by 0.8 percent at 6,573.81 points - still about 8 percent below a record high of 7,122.74 points reached in late April.

Airlines were among the best performers, with easyJet up 1.8 percent and British Airways' owner International Consolidated Airlines Group (IAG) advancing 1.3 percent.

Airline shares were boosted as oil prices fell on the back of record new production levels and after a government-appointed commission said Britain should build a third runway at Heathrow Airport.

"Improving capacity at Heathrow will definitely help those stocks, while the lower oil price is giving them a further lift," said Securequity sales trader Jawaid Afsar, who added he had recently bought shares in easyJet and IAG.

In spite of the rebound in the market, which followed a 2 percent drop on Tuesday which sent the FTSE down to its lowest level since mid-January, many traders remained cautious given the lingering uncertainty over Greece.

The fate of Greece's membership in the 19-nation euro currency bloc remains in the balance ahead of a referendum on Sunday when Greek citizens will vote on whether to accept the austerity terms of continued international aid.

"The euro zone is in increasingly uncharted territory," said Spreadex analyst Connor Campbell.

Among stocks losing ground, Speedy Hire (LSE: SDY.L - news) - which is outside the FTSE 100 index - slumped 30 percent after issuing a profit warning and announcing the departure of its chief executive. (Reporting by Sudip Kar-Gupta; Editing by Andrew Heavens)