FTSE ends near record highs, commodity shares up

* FTSE 100 closes slightly up, near record highs

* Energy, mining stocks gain on China stimulus hopes

* Broker price target cuts weigh on Burberry

By Atul Prakash

LONDON, May 21 (Reuters) - Britain's top share index ended a shade up, just below last month's record highs, on Thursday, with energy stocks tracking a rally in oil prices and miners banking on China further stimulating its economy.

The UK Oil and Gas index was up 1 percent as crude prices rose for a second day, helped by expectations that a global supply glut is starting to ease and by fighting in oil-producing Iraq. Oil majors Royal Dutch Shell (Xetra: R6C1.DE - news) and BP rose 0.8 percent and 1.4 percent respectively.

Miners BHP Billiton and Antofagasta (Other OTC: ANFGF - news) gained 0.7 percent each after a survey showed Chinese factory activity contracted for a third month in May.

But the signs of weakness in the world's top metals consumer just fed expectations that the authorities will do more to encourage borrowing and lending.

"Investors are viewing 'bad news as good news'. I feel China will continue to be aggressive and cut rates and launch other forms of stimulus to meet its growth targets," IG (LSE: IGG.L - news) market analyst David Madden said.

The blue-chip FTSE 100 index ended 0.1 percent higher at 7,013,47 points, leaving it less than 2 percent below a record high of 7,122.74 points reached in April. The FTSE remains up by around 7 percent since the start of 2015.

"We stand by 7,100 points as a near-term target for the FTSE. We are still buyers of this market," said Thames Capital Markets' trader Gerren O'Neill.

The market showed little reaction to data showing British retail sales rose more strongly than expected in April, recovering from a surprise fall in March, as unusually warm weather encouraged shoppers to buy new clothes.

But higher energy prices hurt travel and leisure stocks. Shares (Frankfurt: DI6.F - news) in British Airways owner IAG, airliner easyJet and Cruise operator Carnival (LSE: CCL.L - news) fell 1.9 to 2.4 percent. Carnival also dropped as its shares traded without the attraction of their latest dividend payouts.

Luxury goods group Burberry fell 1 percent as several brokers reduced their price targets on the company's shares. Burberry shares slumped by 5 percent on Wednesday after the company cut its 2016 profit guidance.

(Additional reporting by Sudip Kar-Gupta; Editing by Catherine Evans/Ruth Pitchford)