Glencore, Lloyds lift FTSE as investors hail earnings

* FTSE 100 end up 0.5 pct

* Lloyds, Glencore (Frankfurt: 8GC.F - news) rise after results

* AA (Frankfurt: A116XA - news) plunges after saying it will pay lower dividends (Adds closing prices, recasts as FTSE reverses losses)

By Kit Rees and Julien Ponthus

LONDON, Feb 21 (Reuters) - Britain's FTSE 100 outperformed its European peers on Wednesday as solid earnings from Glencore (Amsterdam: GX8.AS - news) and Lloyds gave a boost to miners and financial shares, helping lift the blue-chip index into positive territory after earlier losses.

The FTSE closed 0.48 percent higher at 7281.57 points after spending part of the day in the red in a session that was in sharp contrast to the previous one.

"The London market did a U-turn from yesterday which was held back by BHP Billiton (NYSE: BBL - news) and HSBC. Whereas today impressive results from a bank and miner drove the index higher", CMC (Shanghai: 600327.SS - news) Markets analyst David Madden said.

Mining giant Glencore jumped 5.2 percent after full year results that its CEO Ivan Glasenberg hailed as the strongest on record thanks to a rally in commodity markets and cost cuts.

Paul Gait of Bernstein, which rates Glencore outperform, said the results were solid, and the reduction of net debt to $10.6 billion, representing a deleveraging of $5 billion over the year, was remarkable.

Referring to Glencore's ability to capitalise on an upturn in electric vehicles and energy storage systems, he said: "We see Glencore as almost uniquely positioned in this regard."

The UK mining index rose 2.1 percent, with Anglo American (LSE: AAL.L - news) up 3.2 percent.

Financials added the most points to the index as they benefited from the earnings update from Lloyds, which reported its highest pre-tax profit since 2006 and announced a share buy-back of up to one billion pounds.

"There's a lot to like in Lloyds' numbers, with profits rising, costs under control, and prodigious amounts of cash being thrown off to shareholders," said Laith Khalaf, senior analyst at Hargreaves Lansdown (Frankfurt: DMB.F - news) .

The reaction to Lloyds results was a contrast to Tuesday's 3 percent decline in peer HSBC, which offered less clarity on share buybacks and said it needed more capital.

Britain's mid-cap index was hit by a number of large individual falls, retreating 0.1 percent.

AA plummeted more than 28 percent to an all-time low after the roadside recovery group and insurer forecast lower core profit and said it planned to pay lower dividends.

Firstgroup (LSE: FGP.L - news) dropped more than 12 percent after the transport company downgraded its forecast for annual core earnings, saying its U.S. coach and bus services were affected by severe snowstorms in January. (Editing by Tom Pfeiffer and Alison Williams)