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* FTSE 100 up 0.3 percent
* Crude price relief drives oil stocks higher
* Water utilities fall on downbeat note
* Liberum warning sends Provident Financial down again
By Helen Reid
LONDON, July 3 (Reuters) - Britain's major share index entered the second half on the up on Monday, with strong gains among financials, miners and energy companies while some utilities suffered after a downgrade.
The FTSE 100 was up 0.3 percent by 0810 GMT, lagging the broader European market which gained 0.6 percent. It was set for its first day of gains in five after a downbeat week.
Oil companies, which have been the worst-performing this year, supported gains among blue-chips and mid-caps, buoyed by higher crude prices after the first fall in U.S. drilling activity in months alleviated some concerns over a supply glut.
Tullow Oil rose 2.5 percent, while oil services firms Petrofac and Amec Foster also gained. Oil majors BP and Royal Dutch Shell made more modest gains on the blue-chip index.
"Having led everyone down for most of the second quarter, crude prices are trending up slightly," said Ian Williams, economics and strategy analyst at Peel Hunt.
HSBC,, Lloyds and Barclays were among top gainers after several central bankers last week indicated their intention to begin monetary tightening.
"Given the trend in sentiment over the rate outlook, the financials having been calm before that, you would expect them to be moving back to the top of the list again," said Williams.
Glencore,, whose trading arm also benefits from higher crude prices, led gains among miners, also supported by better than expected factory activity data from China.
Provident Financial, whose profit warning sent its shares plummeting 18 percent on June 21, was the top faller after Liberum analysts said another profit warning for the Home Credit division was likely.
"Guidance remains too optimistic, in our view," they said.
United Utilities and Severn Trent fell 1.6 and 1.3 percent respectively after a downbeat note from Bernstein on the UK water sector. It said upcoming regulation could dent firms' profitability and M&A was unlikely.
"We do not believe the market is adequately pricing in the risk of a material reduction in the weighted average cost of capital and the heightened political risk, which makes M&A unlikely," said Bernstein analysts, downgrading United Utilities and Severn Trent.
Among mid-caps, Electrocomponents gained after its first-quarter results impressed with a 13 percent growth in revenues.
Its shares climbed 2.8 percent, taking its gains over the past 12 months to 133 percent. They were near their highest level since the 2000 tech bubble.
Investors were also readying for the stream of second-quarter earnings updates from UK corporates to begin.
"The next few weeks will be quite telling. There's still a little bit of upside potential in the overseas earners, and the domestics especially will be interesting to watch given the pressures on the UK consumer," said Williams. (Reporting by Helen Reid; editing by John Stonestreet)