* FTSE up 0.2 percent
* Banks down on capital requirement and Europe worries
* Defensives gain on investor uncertainty
By Simon Falush
LONDON, Jan 24 (Reuters) - Strength from defensive stocks
pushed Britain's top shares higher by midsession on Monday, but
losses from banks on worries about capital constraints kept
gains muted.
Tobacco stock British American Tobacco <BATS.L> and
drugmaker AstraZeneca <AZN.L> were among the biggest supports to
the index as investors, uncertain on the outlook for the
domestic and global economy, sought companies thought to be
resilient.
By 1214 GMT, the FTSE 100 index <> was up 9.16 points,
or 0.2 percent, at 5,905.41, having risen 0.5 percent on Friday.
Banks <.FTNMX8350> were the biggest fallers on fears they
could face greater balance sheet strains under proposals from a
government-backed commission to make their retail arms safer.
[].
The cyclical sector was also under pressure as investors
were still wary about taking positions in more growth reliant
stocks.
"There's uncertainty about what the final outcome will be on
banking regulations and there's going to be months and months of
speculation," said Phil Dobbins, financials analyst at Shore
Capital.
"But I also think they are being hit as a risk trade, as
people sell them whenever there's concern on the wider economy."
Royal Bank of Scotland <RBS.L>, which rose 6.5 percent on
Friday on reports the part-nationalised bank could leave the
government's asset protection scheme early, fell 3 percent.
The sector was also knocked by instability in the euro zone
after Ireland's junior coalition party withdrew from Prime
Minister Brian Cowen's government.
Elsewhere engineer Invensys <ISYS.L> shed 2.9 percent as
Goldman Sachs cuts its rating to "neutral" from "buy" in a
review of European capital goods companies.
Chip designer Arm Holdings <ARM.L> fell 1.2 percent, with
traders citing comment from Barron's, an influential American
financial magazine, which poured cold water on recent bid talk.
HOTELS, GROCERY SUPPORT
Back among gainers, Whitbread <WTB.L> gained 1.7 percent
after the hotel group was upgraded to a "buy" by Citigroup,
which sees it trading cheaply after cost cutting and an increase
in room numbers.
Online grocer Ocado <OCDO.L> was the star midcap <>
gainer, jumping 7.2 percent, with traders citing reheated bid
talk, a U.S. investor upping its stake and investors closing
short positions.
Mining <.FTNMX1770> and energy <.FTNMX0530> stocks fell amid
concerns over Chinese inflation and fears of further interest
rate rises from the world's biggest consumer of raw materials,
still lingering. Antofagasta <ANTO.L> was down 1.1 percent.
Analysts at JP Morgan, however, urged investors remain
upbeat on cyclical stocks in a strategy note.
"We advise not to abandon the group and see potential
further 50 percent upside from here," the broker said.
No key British or U.S. data were due on Monday.
Technical indicators indicated that there could be further
short term pressure for the index.
"The long-term chart is indicating further downside pressure
is likely with 5,804.84 to 5,737.43 the likely target," James
Hyerczyk, Analyst at Autochartist, said.
(Additional reporting by David Brett; Editing by Jon
Loades-Carter)
