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* FTSE 100 flat, mid caps up 0.1 pct
* Technical issues delay opening auction
* Banks, energy stocks rally
LONDON, June 7 (Reuters) - The UK's top share index held steady on Thursday following a delayed open as stocks trading ex-dividend outweighed a rise among banks and big oil, while a stronger pound also added pressure.
The blue chip FTSE 100 index was flat in percentage terms at 7,709.51 points by 0859 GMT, while mid caps edged 0.1 percent higher.
Trading in UK stocks was delayed for an hour, with exchange operator LSE saying this was due to technical issues.
Delays aside, falls among stocks going ex-dividend such as Vodafone and Sainsbury's capped gains for the UK index, which underperformed broader gains for continental European equities.
Likewise a rising pound put pressure on foreign-earnings stocks, such as big consumer staples firms.
Cyclical stocks were in demand, however, with financials and energy stocks on the up.
Banking stocks were sold off heavily last week when worries over potential fresh elections in Italy dented investor appetite for risk. Shares in Europe's banking index ended the week with a 3.4 percent loss, while British banks also suffered.
But markets have since calmed following the formation of a new Italian coalition government of two anti-establishment parties, while a rise in European bond yields has also helped banking stocks following hints from rate-setters that the ECB could announce the end of bond buying next week.
"Risk appetite has improved in general, and (the banks) are higher beta (more volatile) so they tend to benefit from that," Mike van Dulken, head of research at Accendo Markets, said, referring to banking stocks' tendency to be volatile.
"Yes, there are still things that you can worry about if you want to, but they don't seem to be dragging on sentiment anymore," van Dulken added.
A buoyant oil price also boosted shares in oil majors BP and Royal Dutch Shell.
The FTSE's heavy weighting in commodities stocks has helped it rebound from March's lows following a shaky start to the year, with the index now in positive territory for the year even as two key Brexit-related events loom.
Despite worries over sectors such as retail and outsourcing, UK mid caps are also in positive territory for the year.
On the day, mid caps saw bigger moves than on the FTSE, with shares in car advertising business Auto Trader jumping 7 percent after an earnings update, while shares in outsourcer Capita rose nearly 6 percent following an upgrade from Citigroup. (Reporting by Kit Rees; Editing by Jon Boyle)