UK's FTSE 100 ends flat as energy, retailers weakness counters defence gains

Jan 8 (Reuters) - London's FTSE 100 was little changed on Thursday as weakness in oil and retailers was offset by rising defence and financials stocks, with the rally in British equities taking a breather after hitting a record high earlier this week.

The blue-chip FTSE 100 .FTSE held steady at 10,044.7 points, while the domestically focused mid-cap index .FTMC was also flat, holding near its four-year peak.

Energy giant Shell SHEL.L fell 3.5% after the company said it expects a loss in its chemicals and products business in the fourth quarter, prompting questions over whether it will maintain the pace of its share buyback programme. Rival BP BP.L was down 0.6%.

At the bottom of the FTSE 100 was Associated British foods ABF.L, which slumped 14% after it warned annual profit would fall as heavy discounting at its Primark fashion business and weaker U.S. demand hit food ingredient sales.

Greggs GRG.L fell 5.8% after the fast food chain warned subdued consumer confidence meant profit would be flat this year, despite a pick-up in sales in the Christmas quarter.

Food retailer Tesco TSCO.L forecast full-year profit at the upper end of its guidance as it reported a 3.2% rise in underlying UK sales for the key Christmas trading period. Its shares however, fell 6.7%.

DEFENCE STOCKS AT PEAK AS US MAY HIKE MILITARY SPENDING

Helping offset some losses, defence stocks .FTNMX502010, rose to a record high, joining a rally in European and U.S. peers after President Donald Trump called for higher U.S. defence spending.

Britain's largest defence company BAE systems BAES.L gained 5%, hitting its highest since October. U.S. strikes on Venezuela have intensified geopolitical concerns, lifting defence shares earlier this week.

Heavyweight banks .FTNMX301010 climbed 0.8%, offsetting some weakness.

UK stocks started the year on a strong note. The blue-chip FTSE topped 10,000 points for the first time last week as investors also priced in Bank of England rate cuts later this year.

The focus now is on a U.S. December jobs report due on Friday, which could offer more clues about the Federal Reserve's interest rate path.

Meanwhile, data on Thursday showed British house prices rose by a slower-than-expected 0.3% in the 12 months to December.