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UPDATE 2-FTSE trails Europe as exporters dip, Glencore tumbles

* FTSE 100 down 0.7%, FTSE 250 up 0.2%

* Glencore slumps 9%, biggest drag to main index

* Burberry boosted by Moncler speculation

* Dunelm soars after profit forecast upgrade

* M&G down 2% on suspension in dealing in property fund (Adds company news items, updates share moves to closing prices)

LONDON, Dec 5 (Reuters) - London's FTSE 100 slid on Thursday due to a 9% plunge in Glencore after news of a bribery investigation and as dollar earners fell with sterling gaining on growing hopes that the upcoming election will not result in a hung parliament.

Sterling rallied to a 2-1/2 year peak against the euro and a seven-month high against the dollar.

A stronger pound weighs on the overseas earnings of multinationals such as HSBC and Unilever as well as mining companies and oil majors.

The blue-chip FTSE 100 index ended 0.7% lower, lagging its peers in Europe and on Wall Street.

The more domestically focused mid-cap index, the FTSE 250 , added 0.2%, led higher by a near 20% surge in home furnishings retailer Dunelm after it raised profit expectations.

The index also got a boost from strengthening in the local currency.

"The pound became Thursday's focus, one week away from the UK's general election," said Spreadex analyst Connor Campbell.

Lack of fresh updates on the U.S.-China trade front also brought some caution among traders across the globe.

Among single stocks, Glencore tumbled to a three-year low after news that Britain's Serious Fraud Office has launched an investigation into the diversified miner over suspicions of bribery.

The fall wiped roughly 2 billion pounds ($2.57 billion) off Glencore's market cap, leaving it with a valuation of 30 billion pounds at session end.

Among the best blue-chip performers was Burberry after a report that French group Kering had expressed interest in a potential takeover of Italy's Moncler.

The M&A speculation comes hard on the heels of LVMH's $16 billion takeover of jeweller Tiffany and has reinforced the appeal of the sector despite U.S. threats to slap tariffs on French luxury products.

Burberry was up 3.1% while European peers Moncler, LVMH, Kering and Hugo Boss also gained, with Moncler's 7% jump leading the pack.

On the midcap index, luxury sports car maker Aston Martin , which has tanked 70% since a 2018 debut, surged 18.2% after a report that the owner of Formula One team Racing Point, Lawrence Stroll, was preparing a bid for major stake.

Fund manager M&G Investments, meanwhile, fell 2% after it suspended dealing in its flagship UK property fund on Wednesday, citing the impact of Brexit uncertainty.

Another significant mover was online fashion retailer Boohoo , which slid 6% after its founders sold shares worth 142.5 million pounds ($182.8 million).

Packaging firm DS Smith dropped over 7% after financial results failed to cheer investors.

($1 = 0.7794 pounds) (Reporting by Thyagaraju Adinarayan, Julien Ponthus, Joice Alves and Muvija M; Editing by David Goodman and Ken Ferris Editing by David Goodman)