* FTSE 100 closes down 0.04 percent
* Barclays, RBS gain on ICB report relief
* Miners up on positive broker note
By Joanne Frearson
LONDON, April 11 (Reuters) - Britain's top share index closed flat on Monday, with caution from traders wary of turbulence during the U.S. earnings season offset by strength in the banking sector following a key report on the future shape of UK banking.
After the market's close on Monday, aluminium maker Alcoa will unofficially kick off the earnings season, with investors likely to focus on the impact of higher commodity costs on company margins this quarter.
Analysts expect Alcoa to report quarterly earnings of 27 cents per share on revenue of $6.07 billion, according to Thomson Reuters estimates.
The FTSE 100 closed down 2.31 points, or 0.04 percent, at 6,053.44 after trading in positive territory for most of the day. The index hit its highest closing level since mid-February on Friday.
"The the market will be very cautious of any indication of a loss of earnings momentum," said Mike Lenhoff, chief strategist at Brewin Dolphin, which has 25 billion pounds ($40.92 billion) of assets under management.
"Given the higher commodity prices, we could actually see some high profile earnings disappointments, the market is a bit hesitant at this stage and does not want to sally forth and is holding back."
Traders also said inflation data from the U.S., eurozone and UK this week could be the deciding factor in determining market direction over the next few days.
Banking stocks were in demand after the core Tier 1 capital level recommendations in the UK's Independent Commission on Banking (ICB) report were not as bad as expected and the ring-fencing of retail operations looked less onerous than the sector feared.
"The Basel III Core tier 1 ratio of 10 percent is not the 15 percent to 20 percent some suggested," said Christopher Wheeler, banking analyst at Mediobanca.
Barclays, on which Wheeler has an "outperform" rating and said "looked comfortable" by the new Core tier 1 ratios, rose 2.8 percent. RBS was up 2.3 percent.
However, analysts said the proposals were harsh for Lloyds Banking Group which may have to sell hundreds more branches, with Wheeler noting the bank "may get less for selling branches now". Lloyds was up 0.3 percent.
MINERS GET BROKER BOOST
Elsewhere, miners were given a boost after Credit Suisse upgraded BHP Billiton to "outperform" from "neutral" on the back of strong Chinese demand and said Xstrata and Rio Tinto remained its "core structural picks".
BHP Billiton, Xstrata and Rio Tinto gained 0.1 to 1.8 percent. GKN rose 1.1 percent after the British plane and car parts maker said it expects continued strong trade from its land systems business, with Investec Securities reiterating its "buy" rating on the stock.
On the downside, WPP, the world's biggest advertising group, fell 1.9 percent, hit by a negative outlook from media buyer ZenithOptimedia and a bearish sector note from UBS. (Editing by David Cowell)