Britain's FTSE edges higher, Aveva deal boosts mid caps

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* FTSE 100 up 0.3 pct, mid caps up 0.4 pct

* Service PMI fails to move markets

* Aveva surges after Schneider Electric (EUREX: SND1.EX - news) tie-up

By Julien Ponthus

LONDON, Sept 5 (Reuters) - Britain's top share index edged slightly higher on Tuesday alongside other European bourses following losses in the previous session prompted by concerns over North Korea's latest nuclear test.

While investors were in no mood for a sell-off, caution was still very much present.

"It is strictly impossible to know what could happen in the next coming hours", Saxo Bank said in a note to its clients, referring to North Korea, whose nuclear test on Sunday triggered international condemnation.

Britain's blue-chip FTSE 100 index was up 0.3 percent at 7,433.29 points by 0848 GMT, with most sectors in positive territory. Mid caps rose at a slightly faster pace of 0.4 percent.

The publication of the IHS Markit (Stuttgart: A1139A - news) /CIPS services Purchasing Managers' Index, which fell to 53.2 in August from 53.8 in July and below the median forecast of 53.5 in a Reuters poll of economists, did not alter the mood of investors.

Shares (Berlin: DI6.BE - news) in precious metals miner Fresnillo (Frankfurt: A0MVZE - news) , which posted the best performance on Monday, surrendered some of its previous gains with a 2.1 percent retreat. Randgold Resources also went back into negative territory and edged down 0.4 percent.

Provident sustained the heaviest losses, with a 3 percent fall, while other financial stocks such as HSBC

Top gainers came from different sectors : hotels and restaurant operator Whitbread (Frankfurt: WHF4.F - news) led the index with a 2.1% rise, followed by entertainment group Merlin, up 1.7 percent, and pharmaceutical group Shire (Xetra: S7E.DE - news) , rising 1.5 percent.

A tie-up announced between Schneider Electric and Aveva gave a boost to the British group's shares, which jumped as much as 25 percent and were set for their biggest one-day gain in more than two years.

British housebuilder Redrow (LSE: RDW.L - news) was another buoyant midcap stock. Its shares sprung 5.7 percent after it posted better-than-expected 2016-17 pre-tax profits and said revenue and profit expectations would continue to rise into 2020.

Shares in British bicycle and car part retailer Halfords also rose strongly after maintaining its full year profit guidance on Tuesday as it reported retail like-for-like sales growth of 3.5 percent in the 20 weeks to August 18.

TalkTalk shares were slightly higher, up 1.2 percent, after the Financial Times reported it was exploring an exit from its mobile operations.

British online gaming company 888 Holdings rose 1.6 percent after posting a 9 percent rise in first-half revenue on the strength of its casino and sports betting business. (Editing by Gareth Jones)