Britain's FTSE flat ahead of BoE minutes

By Ana Nicolaci da Costa

LONDON, Dec 19 (Reuters) - Britain's top share index was flat on Wednesday, as concerns over growth hurt banks, while investors looked to the Bank of England minutes to see how eager policymakers are to continue easing monetary conditions.

At 0855 GMT, the FTSE 100 index .FTSE was little changed at 6,279.9 points, having closed flat in the previous session.

Barclays (BARC.L) fell 1.3 percent, HBOS HBOS.L shed 1 percent and RBS (RBS.L) gave up 0.5 percent.

The weakness in banks was symptomatic of how worries about growth and rising inflation pressures in the world's largest economy are trumping efforts by major central banks to relieve tensions by adding liquidity to money markets.

For more insight into UK monetary policy investors will look to the publication of the minutes of the Monetary Policy Committee's December meeting, when it cut interest rates for the first time in two years to 5.5 percent.

"You are getting a response from the central banks which is good but I think the market would like more confidence that actually you will get policy rate cuts," said Philip Isherwood, strategist at Dresdner Kleinwort.

"Very large-scale liquidity provision is good but it does highlight there is a problem. The number of banks that took the money shows that actually it appears to be reasonably widespread in terms of the need for liquidity over the year-end or otherwise."

The European Central Bank and Bank of England flooded money markets with funds as the UK central bank chief warned of a possible downward spiral in credit conditions on Tuesday.

Among individual stocks, shares in volatile Northern Rock NRK.L pared gains to 2.5 percent after rival Bradford & Bingley BB.L said it was not actively looking at any part of the troubled lender.

The BBC had reported that Bradford & Bingley, Britain's biggest buy-to-let lender, had approached Northern Rock about certain assets.

GROWTH WORRIES

Miners also felt the pinch from growth worries even as a formal bid by BHP Billiton (BLT.L), the world's biggest mining company, to take over smaller rival Rio Tinto (RIO.L) looked increasingly a case of when and not if. [ID:nL18478948]

Britain's Takeover Panel will likely issue a deadline to BHP by the end of the week, giving it about six weeks to come forward with a firm bid or walk away from what would be the second biggest takeover in history.

Rio Tinto (RIO.L) was down 0.6 percent, BHP Billiton lost 0.7 percent and Anglo American (AAL.L) fell shed 0.5 percent.

But the biggest blue chip percentage loser was InterContinental Hotels (IHG.L), down 3.4 percent after Morgan Stanley cut both the stock's rating and price target.

The bank reduced InterContinental Hotels to "equal weight" from "overweight" and lowered its price target to 980 pence from 1,100p.

Heavyweight BP (BP.L), down 0.3 percent, also weighed on the index even as Royal Dutch Shell (RDSa.L) rose 0.7 percent along with higher crude prices.

Investors are worried that high food costs and rising oil prices will continue to fuel inflation, making the U.S. central bank less willing to cut interest rates to revamp growth for fear of adding to price pressures. (Additional reporting by Michael Taylor; Editing by David Holmes)