FTSE flat at midday; defensives, oils offset banks

* Defensives in demand

* Oils higher; BP rallies after recent sell-off * Banks softer as risk appetite retreats

By Tricia Wright

LONDON, July 8 (Reuters) - London's top share index was flat at midday on Wednesday, as strength in defensive stocks and oils was offset by falls in bank stocks.

The FTSE 100 .FTSE was down 1.40 points, or 0.03 percent, at 4,185.60 at 1046 GMT, after touching its lowest level since late April earlier in the session. It closed 0.2 percent lower at 4,187.0 on Tuesday.

The index has gained 21 percent since hitting a six-year low in March, but is still down 5.6 percent for the year.

"There's continuing uncertainty about the outlook for the economy and that continues to weigh on sentiment, even though the economic indicators generally are getting a little bit better," said Darren Winder, head of macro and strategy research at Cazenove.

Good gains were seen from defensive pharmaceuticals, telecoms and tobacco issues as investors bought into assets perceived as safe bets in an extremely risk averse environment.

GlaxoSmithKline (GSK.L) added 1.8 percent, while index heavyweight Vodafone (VOD.L) climbed 1 percent, and British American Tobacco (BATS.L) gained 0.4 percent.

Oil and gas producers were also firmer. BP (BP.L) enjoyed a bounce after a recent sell off, up 1.1 percent, with BG (BG.L) and Royal Dutch Shell (RDSa.L) both up 0.4 percent.

Tullow Oil (TLW.L), meanwhile, shed 0.6 percent after saying it expected first-half revenue to fall 23 percent on lower oil prices. [ID:nL8338920]

Some miners rallied, against a backdrop of mixed metal prices and after a broadly positive note from Citigroup, which raised Rio Tinto's (RIO.L) target price and its recommendation on Antofagasta (ANTO.L) to "hold" from "sell".

Rio Tinto and BHP Billiton (BLT.L) were also boosted by a note from Investec which raised them to "buy" from "hold".

Rio Tinto gained 0.5 percent, Antofagasta added 0.9 percent and BHP Billiton rose 1 percent.

Banks, however, were under pressure, with investors' risk appetite diminished. Barclays (BARC.L) shed 2.3 percent, HSBC (HSBA.L) was off 0.3 percent, Lloyds Banking Group (LLOY.L) fell 0.7 percent and Royal Bank of Scotland (RBS.L) dropped 0.8 percent.

ECONOMIC DATA, OUTLOOK

Highlighting the headwinds buffeting the economy, the Halifax house price index showed prices fell 0.5 percent on the month in June to be 15 percent lower in the three months to June compared to a year ago.

Meanwhile, British consumer confidence rose in June as people became more optimistic about the future of the economy, a Nationwide survey showed.

The Nationwide consumer confidence index rose to 58 in June from an upwardly revised 54 in May, almost reaching the 59 reading a year earlier. The original reading for May was 53. [ID:nLAG003589]

U.S. May consumer credit numbers should be a focus later in the session, and the U.S. second-quarter corporate earnings season kicks off as well on Wednesday, with Alcoa (AA.N) and Pepsi Bottling Group PDG.N among the first.

Leaders from the Group of Eight major industrial nations are expected to warn against complacency over economic recovery when they begin an annual summit in L'Aquila, Italy on Wednesday. [ID:nL8395794]

"I think there is considerable upside in equities on a 6-12 month view, but for that we are going to need profits in the cyclicals to recover, and we need to see valuations in the defensive areas of the market expand. And at the moment that's not materialising," Cazenove's Winder said. (Editing by Dan Lalor)