Britain's FTSE set for third straight month of gains

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* FTSE 100 flat

* Banks, Berkeley Group lead the gainers

* Miners track metals prices lower

* Restaurant Group falls on downgrade

By Kit Rees

LONDON, Aug 31 (Reuters) - UK shares steadied on Wednesdayas weakness in mining shares outweighed gains by banks, thoughthe FTSE 100 remained on track to post its third monthlygain in a row.

The blue chip FTSE 100 index flat in percentage terms at6,819.35 points by 0847 GMT, slightly underperforming thebroader European market.

Banking stocks Barclays, Royal Bank of Scotland, HSBC Holdings and Lloyds Banking Group all rose 1.3 percent to 2.4 percent after a series ofencouraging reports on the British economy.

The latest showed British consumer morale in Augustrecovered somewhat from the slump that followed Britain's voteto leave the European Union. Another, from mortgage lenderNationwide, said house price rises picked up speed more thanexpected in August .

The house price data buoyed housebuilder Berkeley Group, which led the day's gains with a 2.5 percent rise,despite worries that it could be relegated from the FTSE 100 inan upcoming reshuffle.

The FTSE 100 is now 7.3 percent above its pre-Brexit levelhelped by a fall in sterling. The FTSE 250 has alsorecovered, up 2.6 percent since the vote.

"The market seems to be relatively buoyant and that's notreally surprising given that interest rates are so low. There'snot many other options in terms of where money is going to flowother than the stock market, given the historic low yields onbonds and cash not really producing very much," said LaithKhalaf, senior analyst at Hargreaves Lansdown.

Mining companies fell the most on the FTSE 100 as metalsprices dropped. Randgold Resources and Fresnillo both lost 2.4 percent. BHP Billiton, AngloAmerican and Rio Tinto dropped 1.7 percent to2.2 percent.

Outside the blue chips, Restaurant Group dropped 4.6percent after Citigroup cut its rating on the stock to "sell".

"Restaurant Group's share price has bounced over 50% oflate. Given this significant move, and the view that the groupfaces ongoing operational headwinds, we once again downgrade thestock recommendation to Sell," Christopher J McVey, an analystat Citigroup, said in a note.

(Reporting by Kit Rees, editing by Larry King)