Jan 8 (Reuters) - London's FTSE 100 was little changed on Thursday as weakness in oil and retailers was offset by rising defence and financials stocks, with the rally in British equities taking a breather after hitting a record high earlier this week.

The blue-chip FTSE 100 held steady at 10,044.7 points, while the domestically focused mid-cap index was also flat, holding near its four-year peak.

Energy giant Shell fell 3.5% after the company said it expects a loss in its chemicals and products business in the fourth quarter, prompting questions over whether it will maintain the pace of its share buyback programme. Rival BP was down 0.6%.

At the bottom of the FTSE 100 was Associated British foods, which slumped 14% after it warned annual profit would fall as heavy discounting at its Primark fashion business and weaker U.S. demand hit food ingredient sales.

Greggs fell 5.8% after the fast food chain warned subdued consumer confidence meant profit would be flat this year, despite a pick-up in sales in the Christmas quarter.

Food retailer Tesco forecast full-year profit at the upper end of its guidance as it reported a 3.2% rise in underlying UK sales for the key Christmas trading period. Its shares however, fell 6.7%.

DEFENCE STOCKS AT PEAK AS US MAY HIKE MILITARY SPENDING

Helping offset some losses, defence stocks, rose to a record high, joining a rally in European and U.S. peers after President Donald Trump called for higher U.S. defence spending.

Britain's largest defence company BAE systems gained 5%, hitting its highest since October. U.S. strikes on Venezuela have intensified geopolitical concerns, lifting defence shares earlier this week.

Heavyweight banks climbed 0.8%, offsetting some weakness.

UK stocks started the year on a strong note. The blue-chip FTSE topped 10,000 points for the first time last week as investors also priced in Bank of England rate cuts later this year.

The focus now is on a U.S. December jobs report due on Friday, which could offer more clues about the Federal Reserve's interest rate path.

Meanwhile, data on Thursday showed British house prices rose by a slower-than-expected 0.3% in the 12 months to December. 

(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Bernadette Baum)