Miners knock FTSE 100 after soft China data

* FTSE 100 down 0.7 pct at close

* Brexit-driven pound fall provides brief relief

* Miners hit by weak China factory data (Adds detail and quote, updates prices at close)

By Tricia Wright and Kit Rees

LONDON, Feb 28 (Reuters) - British shares fell on Wednesday, dragged down by mining companies after weak factory data from China, while comments from U.S. Federal Reserve Chairman Jerome Powell reignited expectations of more interest rate hikes in the United States.

The FTSE 100 was down 0.7 percent at 7,231.91 points at its close, tracking further weakness on Wall Street after Powell gave an upbeat view on the U.S. economy and said data had strengthened his confidence on inflation.

Traders boosted bets that the central bank would squeeze in a fourth rate hike this year following the remarks.

A drop in the pound provided some shortlived relief for the FTSE after the European Union's chief negotiator Michel Barnier said a transition deal was not guaranteed and the prime minister said the EU's draft legal text would undermine Britain.

The FTSE 100, which tends to gain when sterling is weak due to its high proportion of international constituents, touched a session high before sliding lower.

"Dealers don’t like uncertainty, and Brexit provides plenty of this – as a result sterling is feeling the pinch," David Madden, market analyst at CMC Markets UK, said.

Among sectors miners were the standout fallers in London after growth in China's manufacturing sector in February cooled to the weakest in more than 1-1/2 years.

The weakness was driven by disruption to business activity due to Lunar New Year holidays and curbs to factory output from tougher pollution rules, but there are worries of a bigger loss in momentum.

Antofagasta (Other OTC: ANFGF - news) , Rio Tinto (Hanover: CRA1.HA - news) , BHP Billiton (NYSE: BBL - news) were all down between 2.7 to 4 percent.

ITV (Frankfurt: A0BLQP - news) , down 7.6 percent, topped the FTSE 100 fallers' list, retreating after gains in the previous session when hopes for a bidding war for Sky (Frankfurt: 893517 - news) after Comcast (Swiss: CMCSA.SW - news) 's offer for the pay-TV group put broadcasters in the spotlight.

ITV reported a 5 percent earnings drop in a tough advertising market on Wednesday. Its earnings met analyst expectations, but it ended its special dividend.

"Investors (are) perhaps reacting to the lack of a special dividend after several years of one-off payments," AJ Bell Investment Director, Russ Mould, said.

"This has prompted speculation in some quarters that the company may be considering an acquisition."

Liberum, which takes this view, said STV, the Scottish ITV1 licence holder, "would make sense" as a bid target for ITV.

Taylor Wimpey (LSE: TW.L - news) fell 4 percent despite full-year results in line with analysts' expectations and a solid start to 2018.

Worries over a downturn in the housing market have weighed on the industry in recent months, with a decline in mortgage approvals and the Bank of England raising benchmark interest rates.

And after a powerful rally in 2017, which saw the Thomson Reuters UK Homebuilding sector rise 44 percent, concern is creeping in about valuation. The index is nursing a 9 percent year-to-date drop.

"The question is whether following the post-Brexit rally, there is any value left in these stocks," Neil Wilson, senior market analyst at ETX Capital, said.

Among bright spots, wealth manager St James's Place beat full-year forecasts across the board, helped by growing demand for face-to-face financial advice.

Its shares rose 2.6 percent, topping the blue-chip risers' list. (Reporting by Tricia Wright and Kit Rees Editing by Gareth Jones)