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 was flat on Thursday, with positive U.S. data balancing a sharp sell-off in Royal Bank of Scotland and increasing tension over Ukraine, which has spooked global markets.

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

Upbeat data on U.S. manufacturing goods’ orders however helped the blue-chip index pare losses, with investors also eying events in Washington where U.S. Federal Reserve Chair Janet Yellen was addressing the Senate Banking Committee on the U.S. economy.

“The markets have edged higher on positive data from across the pond. U.S. initial jobless disappointed but continuing claims and durable goods have helped sentiment,” said Amrit Panesar, senior trader at Accendo Markets.

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

Weighing on world stocks was a report from Interfax news agency that Russian aircraft had been put on high-alert on the Ukrainian border.

“The involvement of Russia would be the bigger worry, that it’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 the British outsourcing group surging 6.8 percent after it posted a 14 percent rise in annual profit. The company said it was confident on 2014 after winning 588 million pounds ($ 978.29 million) worth of new contracts so far this year.

Shares in the world’s largest advertiser WPP were down 3.2 percent despite reporting strong trading, with Liberum and Numis both raising concern over a hit to margins and lower margin guidance moving forward.

“The main reason for the downgrade is that WPP has taken down its longer-term margin improvement targets,” Liberum said in a note, cutting the stock to “hold” from “buy”.

“While January has started well and the share buyback programme has increased, this does not offset the disappointing message on margin improvement,” it said.