Berkeley could be dumped from Britain's FTSE 100 as Brexit bites

* Polymetal set to replace Berkeley in FTSE 100

* UK housebuilding stocks have been impacted by Brexit

* Berkeley shares down by around 30 pct so far in 2016

By Atul Prakash

LONDON, Aug 30 (Reuters) - British housebuilder Berkeley Group could be kicked out of the top UK equity index following a sharp drop in its stock price on concerns about the pace of economic growth in Britain after it voted to leave the European Union.

Berkeley shares have slumped nearly 30 percent so far this year, against a 10 percent gain for the FTSE 100 index.

According to Friday's closing prices, with the London market shut on Monday for a public holiday, mid-cap miner Polymetal would replace Berkeley in the blue-chip FTSE 100 index , the London Stock Exchange (Other OTC: LDNXF - news) said on Tuesday.

However, the LSE added that the changes would be confirmed after Wednesday's close of the stock market and be effective from September 19.

A company's place in the FTSE 100 index is decided on the basis of its share performance. Companies with the lowest market capitalisation get replaced by mid-cap companies with higher market caps every quarter.

A demotion can lower demand for a company's shares as funds that track the index can drop that stock from their portfolios, while conversely companies that win promotion can attract more interest from investors.

Shares (Berlin: DI6.BE - news) in Russia's gold and silver miner Polymetal have surged more than 90 percent this year following a rally in precious metals.

Prices of gold, generally seen as a safe-haven investment, have risen about 25 percent this year while silver prices are up around 30 percent, amid the economic uncertainty caused by June's shock Brexit vote.

The FTSE has managed to ride out the negative effects of Brexit since the global companies that dominate the index have had a lift from the post-Brexit drop in sterling, which typically boosts exporters.

A rise in the U.S (Other OTC: UBGXF - news) . dollar on markets has also boosted FTSE companies that earn much of their revenues in the United States.

However, housebuilders such as Berkeley and its rivals have been more exposed to the effects of Brexit as they are more sensitive to any weakening in the domestic British economy.

Data on Tuesday showed that UK mortgage approvals for house purchases fell to 60,912 last month from 64,152 in June, the lowest since January 2015 and continuing a slowdown since the start of the year. (Editing by Sudip Kar-Gupta and Raissa Kasolowsky)