Britain's FTSE looks set for third straight week of gains

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* FTSE 100 flat

* Miners have led market higher since U.S. election

* AstraZeneca (NYSE: AZN - news) up on M&A spec

* Lloyds falls; Goldman rates it a "sell"

By Alistair Smout

LONDON, Nov 25 (Reuters) - Britain's top share index looked set for a third straight week of gains on Friday, with its heavily weighted commodity sector benefiting from bets on rising inflation even as a broader equity rally stalled.

The FTSE 100, was flat on Friday morning, hindered by a drop in banks, after gaining 0.8 percent so far this week.

Markets, which had been nervous over the prospect of Donald Trump winning the U.S. election, have rallied since his victory as his plans for higher infrastructure spending and fiscal stimulus have boosted prospects for growth and inflation. That has helped commodity stocks in particular, seen as a hedge against inflation and benefiting from faster growth in industrial output.

Global miner Rio Tinto (Hanover: CRA1.HA - news) was the top riser on the index on Friday, up 1.5 percent.

Its chief executive said that the election of Trump could boost commodities demand, and the miner also benefited from target price upgrades by Deutsche Bank (IOB: 0H7D.IL - news) and JP Morgan after its capital markets day.

AstraZeneca was up 1.2 percent as the pharmaceutical sector was in demand. Traders linked the move in AstraZeneca to a report that U.S. healthcare firm Johnson & Johnson (NYSE: JNJ - news) was interested in buying Switzerland's Actelion (LSE: 0QMN.L - news) , sparking bets on further M&A in the sector.

AstraZeneca has shed more than 20 percent since early August, hit initially by concerns that a victory for Hillary Clinton in the U.S. election would result in more regulation for drugmakers, and more recently by warnings from its CEO on persistent pricing pressures as well as uncertainty about Trump's healthcare policy.

However, traders said that the reported bid from J&J for Actelion was evidence that there could still be support from M&A in the sector following the election.

"Bid speculation in AstraZeneca is likely to return. There was a huge pullback in their shares, and you have to see this as an opportunity," Zeg Choudhry, managing director at broker LONTRAD, said.

Lloyds was the biggest loser among bank stocks, falling around 1 percent.

"We are Sell-rated on Lloyds due to further asset margin headwinds," analysts at Goldman Sachs (NYSE: GS-PB - news) said in a note, looking at British banks ahead of Bank of England stress tests.

It said that the stress tests would be the toughest so far, though the sector was in a much improved starting position compared to previous years.

(Reporting by Alistair Smout; Editing by Susan Fenton)