Britain's FTSE flat, pegged back by miners

Thu Mar 28, 2013 5:44am EDT

* Miners weaker, Cyprus jitters inject caution

* Johnson Matthey lifted by acquisition news

* Housebuilders gain, aided by upbeat JPMorgan note

By Tricia Wright

LONDON, March 28 (Reuters) - Britain's top shares traded flat on Thursday, in trade kept cautious by concerns about a potential run on Cyprus's banks, though specialty chemicals firm Johnson Matthey managed strong gains on the back of acquisition news.

The FTSE 100 was off 0.23 of a point at 6,387.33 by 0924 GMT, pegged back by weaker mining stocks, sensitive to nervousness in the market.

Johnson Matthey bucked the slightly weak market trend, topping the blue-chip leader board with a 3.7 percent rise in brisk trade after it completed a 107 million pound acquisition of Swedish formaldehyde producer Formox.

Trading volume in Johnson Matthey stood at around half of its 90-day daily average after just over an hour's trade.

Atif Latif, director of trading at Guardian Stockbrokers, said the acquisition might help to alleviate margin pressures that have been an overhang on the stock over the last few months.

"This may lead to earnings revisions and, with the company having been a weak performer versus the FTSE, this should help alleviate the relative underperformance."

Johnson Matthey has fallen more than 1 percent in 2013 against a rise of around 8 percent on the UK blue-chip index.

Cyprus remained firmly in the spotlight on Thursday. Tight controls will be imposed on transactions by its banks to limit cash withdrawals to no more than 300 euros ($380) per day, ban the cashing of cheques and bar businesses from transferring money abroad unless they can show it is for imports.

"I think it's going to be a little bit tentative - I think we're going to see probably a slight mount in volatility," Joe Rundle, head of trading at ETX Capital, said.

Craig Erlam, market strategist at Alpari, said: "We haven't seen a levy applied to bank deposits as part of a euro zone bailout yet, so it's difficult to see what the reaction will be.

"Given the level of uncertainty, it's not unusual for traders to sit on the sidelines and wait and see how it plays out. I therefore expect things to pick up again next week."

In the second tier, housebuilders were in favour as JPMorgan issued a positive note on the sector, saying last week's UK budget announcements on housing "completely surpassed (its) expectations".

"While we saw scope for an extension of new-build incentive schemes, we did not expect stimulus to be extended to the wider housing market," JPMorgan said in a note.

"We now expect both material market growth from 2014 and believe that material house price inflation is a realistic prospect over the medium term."

Taylor Wimpey and Bellway, which the investment bank upgraded to "overweight", saw respective gains of 1.3 percent and 1.1 percent, while Barratt Developments and Bovis Homes, which it lifted to "neutral", climbed 0.9 percent and 1.4 percent.

Added to this, data from mortgage lender Nationwide showed British house prices were 0.8 percent higher this month than a year ago - the first time prices have risen in annual terms since February 2012.

(Editing by Stephen Nisbet)