FTSE ends higher as China move boosts basic resources stocks

* Blue-chip FTSE 100 finishes 0.8 pct higher

* Mining sector, up 2 pct, is top riser

* IHG benefits from continued merger chatter

By Atul Prakash

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

The FTSE 350 mining index rose 2 percent, the top sectoral gainer, after China cut the amount of cash that banks must hold as reserves.

The blue-chip FTSE 100 index closed 0.8 percent higher at 7,052.13 points, partly recovering from a 1.3 percent drop on Friday. While it climbed back above 7,000, it remained about 1 percent off a record high touched in the previous session.

"Mining stocks are sensitive to macro developments in China and the policy easing ... should help the sector, given that the country is trying to stimulate demand," said Robert Parkes, equity strategist at HSBC.

"We are positive on this 'deeply unloved' sector as valuations are quite attractive and we believe that large international funds still have pretty significant underweight positions on miners."

BHP Billiton (NYSE: BBL - news) , Rio Tinto (Xetra: 855018 - news) , Antofagasta (LSE: ANTO.L - news) and Anglo American (LSE: AAL.L - news) rose 2.0 to 2.7 percent.

Following Friday's fall, gains were broad-based, with other growth-sensitive sectors like banks and oil and gas rising 1.3 percent and 1.0 percent respectively.

However, the FTSE 100 lags some major European indexes including Germany's DAX and France's CAC -- both up more than 20 percent this year against a 7 percent rise for the British index -- before Britain's election on May 7.

Opinion polls put the governing Conservatives neck-and-neck with the opposition Labour party, and the Scottish National Party may emerge as the third biggest, raising prospects of a hung parliament. The ruling party has promised a referendum on Britain's membership of the European Union by the end of 2017.

"A minority government will heighten uncertainty over how successful the government will be in pursuing its policy agenda and how long the next parliament will last. This will lead to higher risk premium for UK assets and an uncomfortable increase in volatility," Bill O'Neill, head of the UK investment office at UBS Wealth Management, said in a note.

"In order of importance: a referendum on EU membership, fiscal policy and devolution will be the key concerns for the markets."

Among other sharp individual movers, InterContinental Hotels (LSE: IHG.L - news) Group rose 2.4 percent, with traders citing merger chatter.

Construction firm Ashtead gained 2.9 percent to 1,144 pence after Barclays (LSE: BARC.L - news) raised its target price to 1,405 pence from 1,289 pence. (Additional reporting by Alistair Smout; Editing by Crispian Balmer/Ruth Pitchford)