* Defensive stocks gain as risk appetite eases
* GlaxoSmithKline posts solid Q2 numbers
* Banks weak; U.S. sector results disappoint
By Jon Hopkins
LONDON, July 22 (Reuters) - Britain's leading shares index added 0.3 percent on Wednesday, extending its winning streak to eight sessions thanks to modest gains on Wall Street and solid second-quarter results from drugs giant GlaxoSmithKline.
At the close, the FTSE 100 was 12.56 points higher at 4,493.73, up 8.2 percent over the past eight sessions.
"The morning session saw profit-taking after the recent rally, however, Glaxo's results and a steady showing on Wall Street bought the market back to par," said Mic Mills, a senior trader at spread betters ETX Capital.
Drug maker Shire was the best blue-chip performer, up 4 percent, with its second-quarter results due in a few weeks, while AstraZeneca gained 1.2 percent.
But GlaxoSmithKline surrendered earlier gains, shedding 0.6 percent on profit-taking after its second-quarter earnings beat expectations and the firm said momentum in the second half would pick up on the back of flu vaccine sales.
Other defensive stocks were in demand as investor's risk appetite abated slightly after the recent strong run, with tobaccos, mobile telcoms and utilities standing out.
Imperial Tobacco was a strong gainer, up 2.7 percent ahead of a trading update due on Thursday, while British American Tobacco added 1.2 percent.
Market heavyweight Vodafone gained 1.0 percent. Telecoms firm BT Group said it would transfer its consumer and small business broadband and voice consumer base in the Republic of Ireland to Vodafone.
Among utilities, Severn Trent added 1.2 percent, extending Tuesday's gains, which followed a trading update, while Pennon firmed 2.2 percent and Scottish & Southern Energy took on 1.8 percent, ahead of an update due on Thursday.
Nomura pointed out that shares in the water companies have been overly pessimistic ahead of Thursday's draft price determination by regulator OFWAT.
Oil majors were mixed as crude prices stayed weak but pushed back above $65. Royal Dutch Shell lost 0.5, but BP added 0.1 percent and BG Group gained 1.7 percent helped by the re-emergence of vague takeover talk.
BANKS EASIER
Banks were weak after the latest results from their U.S. peers dampened optimism about a recovery in the financial sector. Morgan Stanley posted its third consecutive quarterly loss, while Wells Fargo reported rising credit losses.
Barclays, Lloyds Banking Group, Royal Bank of Scotland, and Standard Chartered shed between 0.3 and 3.1 percent. HSBC added 1.0 percent.
Insurers suffered too, with Aviva, Legal & General, and Standard Life off 0.3 to 2.2 percent.
Weakness in mining issues weighed heaviest on the blue chips as investors booked profits after a recent rally.
Lonmin, Kazakhmys, BHP Billiton, Eurasian Natural Resources , and Antofagasta fell between 1.0 and 3.2 percent.
BHP Billiton reported a 10 percent fall in iron ore output to 27.048 million tonnes after its operations were hit by mining fatalities and flooding in Australia.
On the macroeconomic front, Confederation of British Industry industrial data showed that its manufacturing order book fell to its lowest level since January 1992.
Other data also reminded investors that the UK economy faces a long, slow road to recovery.
Britain's economy will return to growth in the last quarter of the year, as companies start to rebuild inventories, but strong growth will not return until 2013, the National Institute of Economic and Social Research said.
"There's a lot of hope priced in about the strength of the recovery ... hope is a good breakfast but a poor supper. Eventually we'll have to see some meat on the table if the rally is to be sustained," said Henk Potts, a strategist at Barclays Wealth. (Editing by Karen Foster)