Britain's FTSE flat after US data helps pare losses; RBS slumps

* FTSE 100 flat on the day

* RBS day's worst performer

* U.S. data help pare losses

* Capita among companies to report good results

* WPP hit on margin concerns

By Joshua Franklin

LONDON, Feb 27 (Reuters) - Britain's top share index wasflat on Thursday, with positive U.S. data balancing a sharpsell-off in Royal Bank of Scotland and increasing tension overUkraine, which has spooked global markets.

Royal Bank of Scotland skidded 8.7 percent afterits new chief executive outlined plans for a large-scaleoverhaul after the mostly state-owned lender reported an 8.2billion pound ($13.64 billion) loss.

Upbeat data on U.S. manufacturing goods' orders howeverhelped the blue-chip index pare losses, with investors alsoeying events in Washington where U.S. Federal Reserve ChairJanet Yellen was addressing the Senate Banking Committee on theU.S. economy.

"The markets have edged higher on positive data from acrossthe pond. U.S. initial jobless disappointed but continuingclaims and durable goods have helped sentiment," said AmritPanesar, senior trader at Accendo Markets.

The FTSE 100 was flat, up 2.61 points, or 0.04percent at 6,801.76 points at 1552 GMT.

Weighing on world stocks was a report from Interfax newsagency that Russian aircraft had been put on high-alert on theUkrainian border.

"The involvement of Russia would be the bigger worry, thatit's going to lead to frosty ties with the EU and for the U.S.with Russia," said Will Hedden, sales trader at IG.

Capita was the day's top performer, with shares in theBritish outsourcing group surging 6.8 percent after it posted a14 percent rise in annual profit. The company said it wasconfident on 2014 after winning 588 million pounds ($978.29million) worth of new contracts so far this year.

Shares in the world's largest advertiser WPP weredown 3.2 percent despite reporting strong trading, with Liberumand Numis both raising concern over a hit to margins and lowermargin guidance moving forward.

"The main reason for the downgrade is that WPP has takendown its longer-term margin improvement targets," Liberum saidin a note, cutting the stock to "hold" from "buy".

"While January has started well and the share buybackprogramme has increased, this does not offset the disappointingmessage on margin improvement," it said.