Britain's mid-caps lag FTSE as spreadbetters tumble

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* FTSE 100 flat, CMC (BSE: CMC.BO - news) and IG (Frankfurt: A0EARV - news) hit FTSE 250

* Commodity stocks drop, HSBC rises after upgrade

By Alistair Smout

LONDON, Dec (Shanghai: 600875.SS - news) 6 (Reuters) - Britain's mid-caps underperformed blue-chip peers on Tuesday, as spreadbetting firms' stocks tumbled after regulators announced a possible crackdown on some of their products.

Britain's financial watchdog proposed tougher rules for retail financial spread betting products known as "contracts for difference" (CFDs) after finding that 82 percent of customers using them lost money.

Mid-caps CMC Markets (LSE: CMCX.L - news) and IG Group were both down about 25 percent, while Plus500 (Stuttgart: P55.SG - news) fell 28 percent.

"This is negative - period - and CMC Markets and IG Group - the two that operate to the highest standards in the industry in our opinion - are collateral damage," RBS (LSE: RBS.L - news) analysts said in a note.

"We do not believe that they are the intended targets, but will be negatively impacted nonetheless."

The British mid-cap FTSE 250 was down 0.4 percent, while the blue-chip FTSE 100 was flat.

The mining and oil sectors were among the biggest weights on the FTSE 100, as copper and Brent crude prices eased back.

Oil prices eased as crude output rose in virtually every major export region despite plans by OPEC and Russia to cut production, triggering fears that a fuel glut that has dogged markets for more than two years might last well into 2017.

However, the FTSE 100 was supported by a rally in bank stocks. Top riser on the index was HSBC, up 2.9 percent, with traders citing a Morgan Stanley (Xetra: 885836 - news) upgrade to "equal-weight" from "underweight".

Strong month-long rallies for industrial equipment hire company Ashtead and heating and plumbing supplier Wolseley (Frankfurt: A1W7PR - news) stalled after their respective results.

Ashtead was roughly flat, despite early gains on the back of results at the upper end of expectations, and Wolseley (EUREX: WLYH.EX - news) fell 1.2 percent despite solid results.

Both sets of results were accompanied by bullish statements on the strength of U.S. growth, a factor investors have already priced in.

The stocks are up 25 percent and 11 percent respectively from lows touched after the election of Donald Trump as U.S. president, having rallied strongly on hopes of an increase in U.S. infrastructure spending.

Mid-cap Drax surged more than 14 percent after it said it plans to buy Opus Energy for 340 million pounds. (Editing by Louise Ireland)