Britain's FTSE steadies, consolidating strong May gains

* Blue-chip FTSE 100 index flat

* Weir gains as Credit Suisse (NYSE: CS - news) boosts forecasts

* Associated British Foods (LSE: ABF.L - news) up on Goldman upgrade

* UK Gfk survey hits other consumer staples

(Adds details)

By Alistair Smout

LONDON, May 29 (Reuters) - Britain's top share index

steadied on Friday, consolidating a strong monthly performance

in May and outperforming European shares, with support from

Associated British Foods and Weir Group after

broker upgrades.

The blue-chip FTSE 100 index was flat in percentage

terms at 7,041.37 by 1321 GMT, up about 1.1 percent this month.

The index has rallied 3.3 percent since lows hit on May 7,

boosted by a decisive Conservative election victory that

investors said removed substantial uncertainties over regulation

and the economy.

The rally has taken the index firmly over the 7,000 level,

where there is also support from the 30-day moving average, to

just 1.2 percent away from an all-time high of 7,122.74 reached

in April.

Traders said positioning for the end of the month helped the

FTSE to recoup early losses.

"As it's the last (trading) day of the month, the fall was

unlikely to be sustained," Zeg Choudhry, managing director of

LONTRAD, said.

"There is still downside potential, but the index managed to

hold 7,000. The longer that holds, the bigger support it

becomes."

Weir Group was among top gainers, up 2 percent after Credit

Suisse raised its target price on the stock and maintained its

"outperform" rating.

Associated British Foods, owner of British Sugar and

budget fashion retailer Primark, rose 2.8 percent to 3,022

pence.

Traders attributed the rise to Goldman Sachs (NYSE: GS-PB - news) lifting its

rating on the share to "buy" from "sell" and increasing its

price target to 3,120 pence from 2,755 pence.

"Our analysis of the U.S. market suggests that Primark's

launch (due in autumn 2015) will be a success," Goldman Sachs

said in a note.

Other consumer staple stocks fell, trimming 5.6 points off

the FTSE 100, with traders saying a weak consumer confidence

survey had dampened sentiment.

A survey from market research company GfK showed optimism

about the British economic situation over the next 12 months

falling to its lowest level since January, while Britons also

become less upbeat about their personal financial prospects.

With the FTSE 100 so near a new record high, the outlook for

stocks may be darkening too.

British investors slashed their equity holdings to a near

three-year low in May, wary of being too exposed to record high

stocks and instead opting for the relative safety of bonds, a

Reuters poll has found.

(Editing by Andrew Roche)