Britain's FTSE slips as markets brace for election

* FTSE 100 down 0.6 pct

* Investors eye tighter than expected UK election

* Energy stocks weigh after oil price sell-off

* RBS (LSE: RBS.L - news) leads financials higher

* RPC (NYSE: RES - news) falls after results (Adds details, closing prices)

By Helen Reid and Danilo Masoni

LONDON, June 7 (Reuters) - Britain's major share index fell on Wednesday, a day before Britons were set to begin voting in parliamentary elections that will shape talks for the country's exit from the European Union.

A sharp drop in energy shares and weakness among big international companies, whose profits benefit from a weak local currency, drove the FTSE 100 down 0.6 percent, as sterling hit a two week high.

Polls have suggested that support for Prime Minister Theresa May's party was slipping, raising the possibility of a smaller majority or a hung parliament.

But investors still saw a Conservative majority as the most likely outcome and although volatility has ticked up over the past week, it remains near historic lows and far from its levels in the run-up to the Brexit vote in June last year.

Mid-caps outperformed blue-chip stocks, up 0.2 percent after three sessions in the red. The more domestically-exposed stocks have been under more pressure of late due to the perception of heightened British political risk.

"I think mid-caps will do better on the back of a Conservative win," said Colin McLean, manager of the UK growth fund at SVM Asset Management, adding they may suffer from a win by Labour whose policies could increase labour costs.

"The bigger picture is that international stocks have been doing less well ... quite a lot of what drove markets last year has gone into reverse over the last six months and investors are looking again at some of the beneficiaries of lower growth and deflation," he added.

"That probably drives investors a little bit more than the election."

The energy sector took most points off the FTSE as oil prices fell sharply following data showing that U.S. stocks of crude oil and gasoline surprisingly rose last week.

Shares (Berlin: DI6.BE - news) in WPP (Frankfurt: A1J2BZ - news) were a top FTSE faller, down 2.6 percent, after the world's largest advertising group released a poor trading update.

Financials stocks were the biggest boost to the index, helped higher by relief after the rescue of Spain's Banco Popular (NasdaqGS: BPOP - news) by Banco Santander (Amsterdam: 817651.AS - news) .

Royal Bank of Scotland and Lloyds both rose more than 1 percent.

Astrazeneca (NYSE: AZN - news) fell 1 percent, after selling the rights for its migraine drug Zomig to Grunenthal for up to $302 million.

Shire (Xetra: S7E.DE - news) also dropped 3 percent.

House prices in May came in 3.3 percent higher than a year ago, slightly ahead of the forecast by economists in a Reuters poll, giving a boost to housebuilders Persimmon (Frankfurt: 882058 - news) and Taylor Wimpey (LSE: TW.L - news) .

Money managers were treading carefully ahead of the next big potential macro shock, mindful of the unexpected outcomes of the Brexit vote and U.S. election.

"This is a dangerous game to play - as polls and bookmakers alike can often be wrong. Even (Taiwan OTC: 6436.TWO - news) with the result known, market direction is difficult to predict," said Asbjorn Trolle Hansen, manager of the Nordea GBP diversified return fund.

Packaging group RPC's profits more than doubled, yet it fell 7.2 percent, as some brokers raised concerns over its acquisition-heavy strategy.

"The group has tried to address these concerns with increased disclosure in these results but has clearly failed to satisfy the market," said Nicholas Hyett, equity analyst at Hargreaves Lansdown (Frankfurt: DMB.F - news) . (Editing by Alexander Smith; Editing by Tom Heneghan)