Shire rally props up UK's FTSE

* FTSE 100 flat

* Shire (LSE: SHP.L - news) rises after agreeing takeover by Abbvie (NYSE: ABBV - news)

* Shooting down of passenger plane hits sentiment

By Sudip Kar-Gupta

LONDON, July 18 (Reuters) - A rise in drug maker Shire propped up Britain's stock market on Friday, cushioning it to an extent from concerns about the conflict in Ukraine, where a passenger plane was shot down over the rebel-controlled east.

The blue-chip FTSE 100 index was flat at 6,737.92 points going into the close of the trading day.

Global stock markets had slumped on Thursday after the shooting down of a Malaysian airliner with 298 people on board.

World leaders demanded an international investigation into the plane crash, which could mark a turning point in the worst crisis between Russia and the West since the Cold War if it convinces reluctant Europeans to get behind tougher sanctions on Russia long sought by the United States.

However, a rally in Shire enabled the FTSE 100 to come off its earlier intraday lows.

Shire rose 3.3 percent, adding the most points to the FTSE, after U.S. rival Abbvie agreed a $55 billion deal to take it over.

In spite of the worries about the Ukraine conflict, some traders have said that corporate takeover activity, and the fact that equities offer better returns than bonds or cash, should enable stock markets to rally into the end of 2014.

"The geopolitical situation is quite jittery at the moment, but everybody is looking at the dip as a buying opportunity," said Novum Securities' technical analyst Adrian Slack.

Others, however, were more circumspect.

"We were buying the dips up until the plane crash. We are now a bit cautious and will not be taking new positions going into the weekend," said Mark Ward, head of trading at Sanlam Securities. (Additional reporting by Andrew Winterbottom and Tricia Wright; Editing by Kevin Liffey)