* FTSE 100 closes down 0.04 percent
* Barclays, RBS gain on ICB report relief
* Miners up on positive broker note
By Joanne Frearson
LONDON, April 11 (Reuters) - Britain's top share index
closed flat on Monday, with caution from traders wary of
turbulence during the U.S. earnings season offset by strength in
the banking sector following a key report on the future shape of
UK banking.
After the market's close on Monday, aluminium maker Alcoa
<AA.N> will unofficially kick off the earnings season, with
investors likely to focus on the impact of higher commodity
costs on company margins this quarter.
Analysts expect Alcoa to report quarterly earnings of 27
cents per share on revenue of $6.07 billion, according to
Thomson Reuters estimates.
The FTSE 100 <> closed down 2.31 points, or 0.04
percent, at 6,053.44 after trading in positive territory for
most of the day. The index hit its highest closing level since
mid-February on Friday.
"The the market will be very cautious of any indication of a
loss of earnings momentum," said Mike Lenhoff, chief strategist
at Brewin Dolphin, which has 25 billion pounds ($40.92 billion)
of assets under management.
"Given the higher commodity prices, we could actually see
some high profile earnings disappointments, the market is a bit
hesitant at this stage and does not want to sally forth and is
holding back."
Traders also said inflation data from the U.S., eurozone and
UK this week could be the deciding factor in determining market
direction over the next few days.
Banking stocks were in demand after the core Tier 1 capital
level recommendations in the UK's Independent Commission on
Banking (ICB) report were not as bad as expected and the
ring-fencing of retail operations looked less onerous than the
sector feared.
"The Basel III Core tier 1 ratio of 10 percent is not the 15
percent to 20 percent some suggested," said Christopher Wheeler,
banking analyst at Mediobanca.
Barclays <BARC.L>, on which Wheeler has an "outperform"
rating and said "looked comfortable" by the new Core tier 1
ratios, rose 2.8 percent. RBS <RBS.L> was up 2.3 percent.
However, analysts said the proposals were harsh for Lloyds
Banking Group <LLOY.L> which may have to sell hundreds more
branches, with Wheeler noting the bank "may get less for selling
branches now". Lloyds was up 0.3 percent.
MINERS GET BROKER BOOST
Elsewhere, miners were given a boost after Credit Suisse
upgraded BHP Billiton <BLT.L> to "outperform" from "neutral" on
the back of strong Chinese demand and said Xstrata <XTA.L> and
Rio Tinto <RIO.L> remained its "core structural picks".
BHP Billiton, Xstrata and Rio Tinto gained 0.1 to 1.8
percent.
GKN <GKN.L> rose 1.1 percent after the British plane and car
parts maker said it expects continued strong trade from its land
systems business, with Investec Securities reiterating its "buy"
rating on the stock.
On the downside, WPP <WPP.L>, the world's biggest
advertising group, fell 1.9 percent, hit by a negative outlook
from media buyer ZenithOptimedia and a bearish sector note from
UBS.
(Editing by David Cowell)
