By Kit Rees
LONDON (Reuters) - Britain's top share index steadied by midsession on Monday, with a rally in energy stocks on the back of stronger crude oil prices offsetting a sell-off in utilities stocks.
The blue-chip FTSE 100 index (FTSE) was down 0.08 percent at 6,349.02 points at 1310 GMT. The benchmark index is down more than 3 percent so far this year.
The UK Oil and Gas index (FTNMX0530) rose 1.1 percent, the top sectoral gainer, as crude prices (LCOc1) advanced after OPEC's secretary-general said he expected global demand to grow next year and the oil market to become more balanced.
However, utilities stocks fell on a series of broker target price cuts and analysts' concerns over the performance of high-yielding stocks, such as utility companies, in a potentially higher-interest rate environment. Higher rates also tend to increase borrowing and servicing costs of companies.
The rate hike concerns were boosted by Friday's stronger-than-expected U.S. jobs data, with shares in utilities such as Severn Trent (L:SVT), United Utilities Group (L:UU) and Centrica (L:CNA) falling 2.0 to 2.5 percent.
But financial companies, which perform well when rates rise, were in demand. Aberdeen Asset Management (L:ADN), Standard Chartered (L:STAN), Barclays (L:BARC) and HSBC (L:HSBA) were up between 1.0 and 2.9 percent.
"Financials including UK banks Barclays and HSBC are rallying as investors expect better lending margins once rates rise," Jasper Lawler, analyst at CMC Markets, said.
"Property companies such as Intu and utilities like Severn Trent are sinking since higher rates will increase the cost of purchasing a mortgage and the cost of servicing high levels of corporate debt will rise."
Shares in Intu Properties (L:INTUP), Taylor Wimpey (L:TW), Persimmon (L:PSN) and Barratt Developments (L:BDEV) fell 2.3 to 3.2 percent.
Among top movers, Intercontinental Hotels Group (L:IHG) fell nearly 4 percent after saying it was not considering a potential sale or merger of the company. On Friday, shares in the hotelier jumped more than 6 percent following a media report that the company was looking at its strategic options.