Banks lead Britain's FTSE higher, M&S slips

* FTSE 100 index up 0.3 percent in volatile trade

* Banks hold onto early gains after Fed minutes

* M&S reverses early gains over concern about strategy

* Index remains stuck in recent range (Recasts, updates prices)

By Alistair Smout

LONDON, April 10 (Reuters) - Britain's top share index rose on Thursday in a volatile session, buoyed by the banking sector after the Federal Reserve indicated it would keep interest rates lower for longer than previously anticipated.

The FTSE 100 was up 20.75 points or 0.4 percent at 6,656.36 points by 1418 GMT, with financials - banks, insurers and asset managers - contributing about half the gains.

Banks rose 1.1 percent after minutes of the Federal Reserve's most recent meeting triggered a shift in expectations of when U.S. interest rates will start to rise.

Interest-rate futures showed the predicted timing of a first rate hike had been pushed out by about six weeks, to July 2015.

"The dovish commentary from the Federal Reserve minutes helped the FTSE 100 get off on the right foot... and UK quotes are still managing to stay in positive territory," IG (LSE: IGG.L - news) analyst Alastair McCaig said.

Other growth-sensitive stocks, such as mining companies, managed only short-lived gains, coming under pressure as China ruled out major stimulus to fight a short-term slowdown, even though imports and exports both fell in March.

British retailer Marks & Spencer (Other OTC: MAKSF - news) also gave away good early gains. The company had traded as much as 3 percent higher in morning deals, following a trading update that showed its turnaround programme may finally be getting results.

It then headed into negative territory, however, down 3.3 percent on the day to be the biggest faller on the index, after an analyst call. The decline reflected concern about profit margins and a delay in any strategic update.

"It seemed like good news across the board at the open, but conference calls often have a big effect." said Toby Morris, senior sales trader at CMC Markets. "This sector is certainly one that tends to see a lot of movement on any potential outlook."

Charts showed the FTSE 100 had slipped into a short-term range, with the index pegged between resistance at 6,700 and support at around 6,500 for the last month.

"The strength of the long-term trend still implies that any break is likely to be to the upside, but the fact that the index is struggling to get away from the lows is still a cause for concern," Charles Stanley (LSE: CAY.L - news) technical analyst Bill McNamara said. (Additional reporting by Atul Prakash; Editing by Catherine Evans)