Britain's FTSE dips as financials fall

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* FTSE 100 down 0.2 pct

* OPEC cut extension boosts oil stocks

* Financials down after US tax reform delay

* Indivior (Frankfurt: 2IVA.F - news) soars on US FDA drug approval

By Kit Rees

LONDON, Dec (Shanghai: 600875.SS - news) 1 (Reuters) - The UK's top-share index dipped on Friday, remaining stuck at a two-month low as falls among financials outweighed a buoyant oil sector, while a surge in Indivior's shares livened up the mid caps.

Britain's blue chip FTSE 100 index was down 0.2 percent at 7,311.30 points by 0938 GMT, outperforming a broadly negative continental European market, while mid caps were 0.4 percent lower.

A pause in the pound's rise also helped the FTSE 100's dollar-earning constituents, which have been hit this week after optimism over Brexit talks boosted the sterling to a two-month high.

Shares (Berlin: DI6.BE - news) in Shire (Xetra: S7E.DE - news) , GlaxoSmithKline (Other OTC: GLAXF - news) and British American Tobacco, all big overseas earners, rose.

But market-watchers are starting to become more cautious on UK blue chips.

"We're actually quite bearish on the FTSE at the moment. The strong cable is definitely suppressing it," Jasper Reimers, senior analyst at Vertex Capital, said.

"If we see any form of progress on the Irish border, then we could potentially change our perspective on the FTSE in the coming days," Reimers added.

The energy sector stemmed broader losses, with shares in heavyweights Royal Dutch Shell (LSE: 0LN9.L - news) and BP flat to slightly higher after OPEC and other major producers agreed to extend output cuts, sending the oil price higher.

However a decline across financials weighed, with Britain's banking index down 0.7 percent, extending the previous session's losses. Disappointment over a delay to voting on the U.S. Senate's tax bill weighed on the sector.

Engineer Babcock was the biggest individual faller, down 3.4 percent after Morgan Stanley (Xetra: 885836 - news) downgraded its rating on the stock to "equal weight" from "overweight".

"Limited visibility on growth and margins, accounting concerns impacting sentiment, and increasing factors outside Babcock's control, such as pace of new tenders, lead us to cut to Equal-weight," Morgan Stanley analysts said in a note.

Among British mid caps, which were down 0.4 percent, Indivior was the standout mover, soaring 10 percent after the pharma firm's experimental drug to fight opioid addiction was approved by the U.S. Food and Drug Administration.

The share price jump took Indivior's year to date gains to 38 percent.

"We believe this decision is key for INDV's investment case and the company was highly sensitive to the outcome," analysts at Jefferies said in a note.

"A decent label and price should also, in our view, help support near-term sentiment and a re-rating of the shares," Jefferies added.

(Reporting by Kit Rees, Editing by William Maclean)