* FTSE 1O0 inches lower, but close to 4-month high
* Banks outperform European peers after Deutsche news
* Basel III bank reforms seen finalised Sunday, Monday
* Miners weak, demand outlook uncertain
By Simon Falush and Simon Jessop
LONDON, Sept 10 (Reuters) - Weaker commodity stocks pushed
Britain's top stock index slightly lower around midday, holding
near a four-month high in cautious trade ahead of new European
bank capital rules which are set to be finalized this weekend.
By 1051 GMT, the blue-chip index was down 3.29 points at
5490.87, after hitting its highest close since the end of April
on Thursday on the back of bullish jobs data from the United
States.
While news of a potential 9 billion euro ($11.4 billion)
share sale by Deutsche Bank <DBKGn.DE> sent banking shares lower
across Europe <.SX7P>, British lenders <.FTNMX8350> fared better
as analysts pointed to their strength relative to continental
peers.
Regulators meet this weekend to hammer out final rules for
lender capital buffers, with talk of a 7 percent core Tier 1
ratio in the market.
State-backed Lloyds Banking Group <LLOY.L> and Royal Bank of
Scotland <RBS.L> were the pick of the bunch, up 1.4 and 1.6
percent, respectively, but analysts cast doubt over how
effective the new rules would be at restoring confidence in the
sector.
"With my cynical hat on, if a well-capitalised bank is
looking to raise more capital, what does that say a) about the
validity of the European stress tests and b) about the strength
of the European banking system more generally," said Jeremy
Batstone-Carr, head of research at Charles Stanley.
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For an interactive graphic detailing equity capital raisings
by European banks since September 2008, click on
http://r.reuters.com/cyw42p
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MINER DRAG
Miners were the biggest weight on the index, cancelling out
some of the sharp gains the previous session, dragged by
lingering uncertainty on the global demand outlook, with
Eurasian Natural Resources <ENRC.L> and Anglo American <AA.L>
both down around 1.3 percent.
Energy stocks also pulled the index down. BP <BP.L> led the
sector lower with a fall of around 0.6 percent after it
announced plans to push back the release of its third-quarter
financial results due to the Gulf of Mexico oil spill.
[]
Gains from defensive tobacco stocks helped limit losses,
however, with Imperial Tobacco <IMT.L> adding 1.3 percent.
After gains this week and last, technical analysts were
pointing to significant resistance not far from current levels.
Nicole Elliott, technical analyst at Mizuho Corporate Bank
said 5,514 was a key level. "A sort of neckline between topping
activity in 1999/2000 and 2006/2007, separating that type of
price action from the rallies and falls before and after them."
British annual factory gate inflation slowed more than
expected to a six-month low in August, helped by a surprise fall
in input prices on the month driven by oil, official data showed
on Friday. In the U.S., July wholesale inventories data is due
for release at 1400 GMT.
3I Group <III.L> was also a strong gainer, up 1.8 percent
after a Financial Times report said it was gearing up to exit
its holding in Dutch pump-maker Hyva, valued at around 500
million euros ($634.4 million), at a large profit.
(Editing by Sharon Lindores)
($1=.7882 Euro)
