Britain's FTSE steadies as banks and miners rally

(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details)

* FTSE 100 flat

* Risk-on sentiment pushes miners, banks higher

* Housebuilders fall on London market worries

* Direct Line (Other OTC: DIISD - news) weak on downgrade

By Kit Rees

LONDON, April 11 (Reuters) - UK shares were flat on Monday, steadied by gains among mining stocks and banks, although housebuilders fell on worries about a slowdown in London's high-end property market.

Shares (Berlin: DI6.BE - news) in mining companies led the gainers, with Anglo American, Glencore (Xetra: A1JAGV - news) and Rio Tinto (LSE: RIO.L - news) all rising between 1.8 and 3.8 percent.

Analysts said comments from the Bank of Japan's governor raising the prospect of further easing had fuelled risk-on sentiment.

"Now (NYSE: DNOW - news) it feels like everyone's looking towards the yen as a barometer for the state of play in terms of whether we're risk-on (or) risk-off," Joshua Mahony, market analyst at IG (LSE: IGG.L - news) , said.

"This is a new dynamic that people are probably going to have to get used to."

Banks Standard Chartered and Barclays (LSE: BARC.L - news) were also higher, both up around 1.7 percent, with traders citing a meeting of Italian banks later in the day as supporting the sector.

The FTSE 100 index flat in percentage terms at 6,206.37 points by 0837 GMT after initial falls, underperforming the broader European market.

Housebuilding stocks were among the top fallers on the FTSE 100 index, with Berkeley Group, Barratt Developments (LSE: BDEV.L - news) , Taylor Wimpey (LSE: TW.L - news) and Persimmon (Other OTC: PSMMF - news) all down between 1.3 percent and 2 percent.

Investors cited concerns about UK economic growth and a slowdown in the London prime property market.

Shares in insurer Direct Line Insurance Group came under pressure, falling 1.6 percent, after investment bank Barclays downgraded their rating on the stock to "equal weight".

"Direct Line has been one of the best performing insurance stocks since its 2012 IPO ... However, we believe the stock is now fairly valued as we lower our estimates for the loss of its Nationwide (LSE: NBS.L - news) and Sainsbury (Amsterdam: SJ6.AS - news) 's contracts," analysts at Barclays said in a note.

A price target downgrade from BNP Paribas (LSE: 0HB5.L - news) also hit the shares of retailer Next (Other OTC: NXGPF - news) , which slipped 1.3 percent.

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA. (Reporting by Kit Rees)