Britain's blue-chip index ended with a small gain on Monday, as profit-taking on mining companies and banks was offset by gains among defensive shares.

The FTSE 100 <.FTSE> index ended up 5.26 points, or 0.1 percent, at 5,892.75, having traded 90 percent of its 90-day volume average.

The index only moved into positive territory late in the session, in what traders interpreted as a signal investors were willing to buy any index dip and remained bullish on the market.

We have seen bargain hunters coming with the dips we have seen so far. That is positive, said Joshua Raymond, a market strategist at City Index.

The FTSE is up 317.8 points this year, or around 5.7 percent. A rally that started in late November began to lose momentum in March, with the index dropping around 24 points in each of the first two weeks of the month, while weekly charts showed declining highs and lows.

We are going through a transition. If we go below (last week's low of) 5,750 this week, then that is going to indicate that there is a correction lingering, but as long as we stay above that level, we are looking for bargain hunters to come in and pick up the loose.

Raymond said a catalyst for equities this week would be the Federal Reserve's Open Market Committee meeting on Tuesday, when investors would be looking for hints of more quantitative easing to boost the economy.

But a spate of strong economic data from the United States has raised expectations that the FOMC might be reluctant to provide additional stimulus.

Fading prospects for more Fed intervention and weak economic data from China, the world's largest consumer of metals, weighed on mining stocks, which closed 0.6 percent lower on Monday.

BANKS FALL

Banks were also targeted by profit takers watching technical indicators as the sector failed to close above a 23.6 percent retracement of its February 21 to March 6 move at the end of a three day-run on Friday.

A report in the Daily Telegraph suggesting that all of the UK's major banks could face an inquiry for allegedly mis-selling complex interest rate derivatives also weighed on the sector.

Barclays , Lloyds Banking Group and Royal Bank of Scotland fell between 2 percent and 3.2 percent, while HSBC was down 0.1 percent.

Traders said some investors were rotating out of banks into real estate groups, encouraged by improving sentiment on the commercial property market after a major acquisition involving French property developer Klepierre on Thursday.

The Klepierre deal has just highlighted some of the most attractive valuations in the sector, said Jon Stewart, an analyst at Espirito Santo Investment Bank.

Hammerson was trading at 0.75 times its book value: those valuations over-discounted any likely weakness that you might see even in retail property.

British Land , Hammerson and Land Securities rose between 1.5 percent and 2 percent in high volume on Monday, extending recent gains.

All three stocks had traded at 0.8 times their 12-month forward book value at the close on Friday, Thomson Reuters Starmine data showed.

Stewart said the sector rally had likely now run its course after a decent outperformance.

Defensive stocks also outperformed, led by Morrison Supermarkets , which topped the leader board with a 2.3 percent rise as it held an investor day to illustrate strong full-year results reported last week. The volume of trade in Morrison's shares was nearly 150 percent of the average.

Food producer Unilever and general retailer Kingfisher were also strong, up 1.9 percent and 1.6 percent, respectively.

(Editing by Jane Merriman)