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FTSE steadies at close as weaker miners offset stronger banks

* FTSE 100 index ends flat after October rally

* Hikma falls 5.2 pct after cautious outlook

* Weak China data hits basic resources stocks

By Atul Prakash

LONDON, Nov 2 (Reuters) - Britain's top equity index steadied on Monday, with a sharp drop in drugmaker Hikma after an update and weaker miners following China's factory data offsetting a late rally in banks.

The blue-chip FTSE 100 index, whose 5-percent rise in October marked its biggest monthly gain since July 2013, closed flat in percentage terms at 6,361.80 points.

Hikma slumped 5.2 percent, making it the worst-performing FTSE 100 stock, after saying trading in its generics unit was worse than forecast.

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Mike van Dulken, Accendo Markets head of research, said investors were penalising the company for its use of a hybrid sales strategy, which included both branded and generic drugs, for gout treatment colchicine. This was resulting in slower updates of the higher-margin generic drug.

"While strength elsewhere is seen compensating to some extent, it will not offset totally and adds to existing headwinds from FX and geopolitics," he said.

Basic resources stocks also lost ground, with the UK mining index falling 0.6 percent after data showed that factory activity in China, the world's biggest metals consumer, fell for an eighth straight month in October.

However, the commodity-heavy FTSE 100 index showed little reaction to data showing growth, as British factories surged unexpectedly to a 16-month high in October, helped by a recovery in export orders.

On the positive side, UK banks extended gains after Visa Inc (Xetra: A0NC7B - news) said it would buy its former subsidiary Visa Europe Ltd in a deal valued at up to 21.2 billion euros.

Barclays (LSE: BARC.L - news) , which has a stake in Visa Europe, is expected to make a post-tax profit of about 400 million pounds, while Lloyds and Royal Bank of Scotland (LSE: RBS.L - news) see a pre-tax gain of 300 million and 200 million pounds respectively from the deal. Shares (Berlin: DI6.BE - news) in the three banks were up roughly 1.7 percent.

However, HSBC fell 0.8 percent. Even (Taiwan OTC: 6436.TWO - news) though Europe's biggest bank reported better-than-expected pre-tax profits for the third quarter, some analysts and investors focused more on lower underlying revenues and weak income.

"The 5-percent miss on income will drive negative earnings revisions in our view, only partly offset by progress on costs," RBC Capital Markets analyst Claire Kane said.

The FTSE 100 is down about 3 percent since the start of 2015, and 10 percent below a record high of 7,122.74 points, reached in April (LSE: 0N69.L - news) .

Thames Capital Markets analyst Nav Banwait expected the FTSE to end 2015 in the 6,800-6,900 range, but said it could first drop to 6,200 in the coming weeks.

"Given the sharp move higher we had in October, we expect that some of the weak results and economic data out there will cause some profit-taking and result in the index moving back down to 6,200 points in the short term," he said. (Additional reporting by Sudip Kar-Gupta; Editing by Richard Balmforth)