August 15, 2014 / 4:10 PM / 3 years ago

Britain's FTSE gives up gains after Russia convoy attack to end flat

* FTSE 100 stable, outperforms key European indexes

* UK seen as less affected than other mkts by Ukraine crisis

* Some profit taking beginning, likely to continue - trader

* BHP rallies on spin-off plans (Adds Russia convoy attack, updates prices)

By Francesco Canepa and Lionel Laurent

LONDON, Aug 15 (Reuters) - Britain’s top equity index ended the day flat on Friday, erasing earlier gains after news broke of a Ukrainian attack on a Russian convoy, although it held up better than other European share markets.

Major European indexes had traded in positive territory for most of Friday on expectations for continued ultra-loose monetary policy after disappointing U.S. and euro zone data.

But news that Ukrainian artillery had destroyed a “significant” part of a Russian armoured column that had crossed into Ukraine overnight, according to Ukrainian President Petro Poroshenko, rattled investors in late trade. The German DAX index was hit particularly hard - down 1.7 percent.

The FTSE 100 closed flat at 6,689.08 points.

“The outperformance is a combination of the fact that (other European markets) are fundamentally more exposed in terms of trade to Russia and that technically they were performing better earlier in the day, so they were quicker to unwind,” said Jasper Lawler, analyst at CMC Markets.

The FTSE ended the week up 1.8 percent, boosted by comments from the Bank of England on Wednesday, which led investors to push back expectations for an interest rate increase, and a general rebound in global equity markets after two weeks of steep declines.

Official data on Friday showed Britain had kept up its strong growth in the second quarter, with its yearly pace of expansion revised up to 3.2 percent, but the Bank of England has said it is paying close attention to wage prospects and slashed its forecasts for wage growth on Wednesday.

As a result, money market investors have push back expectations for a UK interest rate rise until the first quarter of next year at the earliest.

Traders had welcomed conciliatory comments from Russian President Vladimir Putin on Thursday, but tensions between Ukraine and Russia remained high, keeping investors cautious about the market’s near-term prospects.

“Short-term I’d probably be ‘short’ the FTSE because the issues in the Ukraine could influence this market and I think they are going to keep it on a knife’s edge,” Mark Priest, senior trader at ETX Capital, said.

Another London-based trader said that some clients were already taking profit on UK stocks after the past week’s gains and that he also expected a slight correction in the short term.

The FTSE is still down 2 percent since late July, dragged down by tension in Ukraine and the Middle East, as well as concerns about a tightening of U.S. monetary policy.

Helping support the FTSE on Friday was global miner BHP Billiton, rising 1.2 percent after it declared its preference for a spin-off of its unwanted aluminium, manganese and nickel assets.

The spin-off would set the stage for the formation of a separate company that one report said could be worth $14 billion. (Editing by Alison Williams and Susan Fenton)

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