* FTSE 100 flat ahead of ECB
* Tullow Oil boosted by UBS upgrade
* Miners drop with copper on China stimulus disappointment
(Adds quotes, details, updates prices)
By Alistair Smout
LONDON, April 3 British blue-chip shares
steadied after testing a three-week high on Thursday, as the end
of a two-week rally in mining shares offset gains by Tullow Oil.
Market moves were muted, however, before a meeting of the
European Central Bank, as investors waited to see if the ECB
would act in the face of deflation fears.
The British FTSE 100 gave up a 0.2 percent gain,
which took it to its highest since March 12, to trade roughly
flat at 6,657.00 by 1046 GMT.
"The UK flagship index FTSE 100 has encountered some
resistance ... which is understandable given the 2 week rally
from 6500 and the all-important ECB policy decision this
afternoon and US jobs report tomorrow," Mike van Dulken, head of
Research at Accendo Markets, said in a trading note.
Tullow Oil led the risers with a 5 percent gain.
Traders said the move came after UBS upgraded its rating on
Tullow to "buy" from "neutral".
Trading volumes in the stock stood at a four-fifths of the
stock's three-month daily average at 1030 GMT - greater than the
FTSE 100, which were only a quarter of its average.
Kingfisher rose 2.3 percent after Europe's biggest
home-improvement retailer began a 275 million-euro ($378.6
million) takeover bid for France's Mr Bricolage,
moving to strengthen its position in its most profitable market.
Analysts at Oriel Securities said the acquisition made
strategic sense and the deal should help earnings in 2016.
Mining stocks weighed on the market, though. The sector
fell 0.6 percent, after rising 6.8 percent over the
last two weeks.
Heavyweight copper miners such as Rio Tinto and
Anglo American took the most points off the index.
Copper prices weakened after Chinese stimulus measures fell
short of expectations.
Attention is likely to shift to euro zone monetary policy as
the ECB holds its regular meeting. The central bank is expected
to keep interest rates steady and offer no new stimulus for the
euro zone's fragile economies. However, analysts the market
might still fall back if the ECB does not act.
"I think actually we need either a rate cut or a specific
liquidity measure today - I think if we just get talk, there
will be a slight negative response," said Peel Hunt equity
strategist Ian Williams.
Any action the ECB takes would probably boost euro zone
shares more British stocks. It might help to extend the
outperformance of the region's periphery against UK blue chips
so far this year.
The FTSE 100 is down 1.4 percent for 2014, compared
with a 14.9 percent rise in the Italian FTSE MIB.
Just as investors have been betting on an economic rebound
in continental Europe, British stocks have suffered from their
defensive composition, as well as turmoil in emerging markets
during the first quarter.
"UK weakness can be put down to mainly the performance of
defensives within the UK, where you have big defensive
industries with big overseas earners. The strength of sterling
has impacted earners there," Jonathan Stubbs, head of European
equity strategy at Citi, said.
($1 = 0.7263 Euros)
(Additional reporting by Tricia Wright; Editing by Larry King)