* FTSE 100 closes up 0.9 pct; Arm jumps on bid talk
* Miners rally, lifted by Australian tax report, banks gain
* BP down on dividend, litigation worries
By Simon Falush
LONDON, June 10 (Reuters) - A rally by miners lifted Britain's top share index by the close on Thursday, while improved economic sentiment gave banks a boost.
Another sharp fall for BP <BP.L>, however, limited the index's gains, as the costs of the disastrous oil spill in the Gulf of Mexico continued to cloud the company's future.
Miners delivered the bulk of the rally, extending gains after the Herald Sun newspaper said the Australian government would soon announce major changes to a controversial mining tax that has weighed on the sector. [
]Rio Tinto <RIO.L>, Xstrata <XTA.L>, Kazakhmys <KAZ.L> and Eurasian Natural Resources <ENRC.L> added 3.4 to 4.5 percent.
Miners were also supported by positive economic data from China, where robust growth in May exports and imports testified to the underlying momentum of the world's third-largest economy.
The FTSE 100 <
> ended up 46.64 points, or 0.9 percent, at 5,132.50, having broken a three-day losing streak on Wednesday.However, investors were still cautious, with the blue-chip index nursing 11.9 percent losses since Europe's debt crisis escalated in mid April.
"There are any number of problems that could reappear, and credit markets are still not running smoothly," said Tim Whitehead, investment manager at Redmayne-Bentley in Leeds.
"It will be hard to make much headway above 5,200 over the summer, and I wouldn't be surprised if we test 5,000 again.
BANKS BOUGHT
But there was enough optimism to lift cyclical stocks such as banks. Barclays <BARC.L>, HSBC <HSBA.L>, Lloyds Banking Group <LLOY.L>, Royal Bank of Scotland <RBS.L> and Standard Chartered <STAN.L> were up 0.5 to 4.6 percent.
The Bank of England left rates on hold at a record low of 0.5 percent and kept quantitative easing at 200 billion pounds, while the European Central Bank left rates at 1 percent, also an all-time low.
ARM Holdings <ARM.L> was the top gainer, up 5.9 percent, with traders citing the reappearance of rumours of bid interest from Apple <AAPL.O>, though a spokeswoman for ARM said it had received no approach and a takeover from Apple made no sense.
Oil major BP lost 6.7 percent, with investors anxious over the company's ability to pay its dividend and the costs BP will have to assume to deal with liabilities related to the spill.
BP has shed as much as 45 percent of its value since the oil began to leak on April 21, hitting its lowest level in more than 13 years.
The fall in its value has pulled its FTSE 100 ranking down to fourth in terms of market capitalisation, overtaken by Vodafone <VOD.L>, according to Thomson Reuters Datastream.
Britain's No.1 household goods retailer Home Retail Group <HOME.L> dropped 4.1 percent, the second-biggest FTSE 100 faller, after it posted a bigger-than-expected decline in first-quarter sales. (Additional reporting by Dominic Lau, editing by Will Waterman)