By Atul Prakash
LONDON (Reuters) - Britain's top share index steadied on Wednesday, underperforming European peers, with a drop in energy stocks on the back of weaker oil prices offsetting a mining sector rally.
The blue-chip FTSE 100 index (FTSE) was flat in percentage terms at 7,188.20 points by 1006 GMT, after closing marginally higher in the previous session. In contrast, the pan-European STOXX 600 index (STOXX) was trading 0.6 percent higher.
Rio Tinto (L:RIO) rose 1.8 percent after the world's No. 2 iron ore miner beat profit forecasts on the back of cost-cutting and a strong recovery in iron ore prices and said it will pay a bigger-than-expected annual dividend.
"All the dials seem to be moving in the right direction at Rio, mainly thanks to the self-help measures implemented by the company," Hargreaves Lansdown (LON:HRGV) analyst Laith Khalaf said.
"Mining companies are price-takers, and have no control over commodity markets, but Rio has made ground by cutting cash costs and scaling back the dividend."
Rio shares have more than doubled since early 2016.
The UK mining index (FTNMX1770) rose 1 percent, also supported by a 1.5 percent-1.6 percent rise in Antofagasta (L:ANTO), Anglo American (L:AAL) and Glencore (L:GLEN) shares.
Rolls-Royce (L:RR) rose 2.6 percent to 718 pence, making it the top gainer in the FTSE 100, after JP Morgan raised its target price to 740 pence from 730 pence and increased its 2016 earnings per share forecast by 11 percent.
However, gains were negated by weaker energy stocks.
The UK oil and gas index (FTNMX0530) fell 1.3 percent, making it the biggest sectoral decliner, after oil prices extended Tuesday's falls following a massive increase in U.S. fuel inventories and a slump in Chinese demand. [O/R]
"Energy shares have been weighed on by a surprisingly large U.S. API oil inventory build stoking fears that rising U.S. shale production will outweigh OPEC cuts deigned to rebalance the global oil market," Accendo Markets analyst Henry Croft said.
Shares in Royal Dutch Shell (L:RDSa) and BP (L:BP) fell 1.6 percent and 0.5 percent respectively, while mid-cap Tullow Oil (L:TLW) was nearly 5 percent down.