* BA and Iberia boards consider merger

* BT update sees telecoms rise

* Oils down as crude slips, miners weaker

By David Brett

LONDON, Nov 12 (Reuters) - Britain's FTSE 100 .FTSE index was flat at midday on Thursday, although British Airways soared after news that its board was meeting to consider a merger with Iberia, and defensive stocks were mostly firmer, offsetting weakness in cyclical commodity stocks.

At 1222 GMT the FTSE 100 .FTSE was up 0.09 points at 5,266.84. The index ended 0.7 percent higher on Wednesday, having touched an intraday high at a level not seen since September 2008.

"A combination of Cadbury (CBRY.L: Quote, Profile, Research)/Kraft, RIO Tinto (RIO.L: Quote, Profile, Research)/BHP Billiton (BLT.L: Quote, Profile, Research) and BA/Iberia, all these potential M&A stories are all drivers," said Manus Cranny, senior market commentator at MF Global.

"The newsflow has been reasonably positive. Lloyds (LLOY.L: Quote, Profile, Research) has seen extra demand for their convertible bonds from their bond holders, which says to me that the market, underlined, is reasonably optimistic," he said.