* Miners, oils retreat after recent rally
* Pharmas higher boosted by broker upgrade
* Invensys lifted By Goldman upgrade
By Jon Hopkins
LONDON, June 11 (Reuters) - Britain's leading share index was flat in early trade on Thursday with weakness in heavyweight oils and miners balanced by gains in pharma issues supported by a Morgan Stanley sector upgrade.
At 0804 GMT, the FTSE 100 index was 1.53 points, or 0.1 percent, lower at 4,435.22, having closed up 31.96 points, or 0.7 percent, at 4,436.75 the previous session.
"I think it's sensible that the market should consolidate after the very strong rally it's had because although some of the economic news has improved, it is not yet clear it has improved enough to lead to growth in corporate profits," said Andrew Bell, European strategist at investment managers, Rensburg Sheppards.
Oil majors retreated after recent gains as crude prices consolidated around $71 a barrel, with BP, Royal Dutch Shell, BG Group, Cairn Energy, and Tullow Oil losing 0.2 to 1.0 percent.
Miners also saw a recent rally curbed as metal prices came off the boil as well, with Rio Tinto, Eurasian Natural Resources , Xstrata, Antofagasta, Vedanta Resources, and Lonmin losing between 1.2 and 2.4 percent.
Rio Tinto offered a share in a planned iron ore alliance with BHP Billiton to Chinalco as a peace offering following the collapse of Rio's $19.5 billion deal with the Chinese firm, the Australian Financial Review said on Thursday.
Banks were weaker, weighed down by falls in global heavyweight HSBC, down 0.9 percent, with Standard Chartered also losing 0.9 percent.
However, Barclays gained 0.5 percent, while Royal Bank of Scotland and Lloyds Banking Group added 2.1 and 1.9 percent, respectively.
The company managing Britain's stakes in Royal Bank of Scotland and Lloyds Banking Group could sell an "exchangeable bond" in the two banks, according to the Daily Telegraph.
"Sentiment is a bit like a water bed, you never know quite which way it's going to bulge in the short term, but for the market to go... significantly higher we need to see evidence that economies have turned the corner... and that actual economic growth has arrived."
DRUGS WANTED
GlaxoSmithKline was a strong blue-chip gainer, up 1.7 percent as Morgan Stanley raised its rating to "equal-weight" in a review of European drug stocks, with the broker raising its sector view to "attractive" from "in-line".
Peer AstraZeneca gained 0.8 percent. Three widely used antipsychotic medications, including AstraZeneca's Seroquel, appear safe and effective overall in treating children and teenagers with schizophrenia or bipolar disorder, a U.S. advisory panel said.
Engineering blue chip Invensys was also in demand, adding 2.4 percent, while mid-cap peer Tomkins took on 3.7 percent as Goldman Sachs hiked its rating for both to "buy".
Thomas Cook was the top blue-chip riser as ongoing speculative interest swirled around the tour operator, with a battle expected for the stricken German retailer Arcandor's 53 percent stake in the travel firm.
With no UK economic data due on Thursday, U.S. May retail sales and weekly jobless claims, both due at 1230 GMT, may provide investors with further clarity on the world's largest economy as the pace of the economic deterioration has moderated.
British Prime Minister Gordon Brown said recent economic data suggested government action to tackle the recession was starting to have some effect.
(Editing by Simon Jessop)