Miners lead Britain's FTSE higher, outweighing "Brexit" fears

* FTSE 100 up 1.2 pct

* PM strikes deal with EU leaders, referendum date set

* Miners, Coca Cola (NYSE: KO - news) gain

* HSBC slumps after weak results

* Home Retail (Other OTC: HMRLF - news) soars on bidding war (Adds detail, quote)

By Kit Rees

LONDON, Feb 22 (Reuters) - UK shares advanced on Monday as miners took heart from strengthening metals prices, outweighing worries about Britain's potential exit from the European Union and a drop in banking heavyweight HSBC.

Britain's FTSE 100 index rose 1.2 percent to 6,022.70 points by midday in London while the FTSE 350 Mining index hit its highest level since November 2015. It was more than 4 percent higher, with Anglo American (LSE: AAL.L - news) , BHP Billiton, Rio Tinto (LSE: RIO.L - news) and Glencore (Xetra: A1JAGV - news) all up between 5.4 percent and 7.5 percent.

The price of copper reached a two-week high after the head of China's securities regulator resigned and an uptick in the country's steel industry sparked hope of a revival in metals demand.

Investment bank Jefferies raised its target price on Anglo American, which has gained over 50 percent this year, but retained its 'underperform' rating on the stock.

"The risk to the AAL share price is to the downside in the near term, especially after the recent rally. Asset sales and cost-cutting in line with aggressive guidance would be clear long-term positives but will be difficult to achieve in our view," analysts at Jefferies said in a note.

All that was enough to outweigh uncertainties over the impact of Britain's vote on European Union membership, set for June 23 after Prime Minister David Cameron agreed a new deal with EU leaders on Saturday.

The pound was set for its biggest daily fall since May 2010, when a general election unusually produced no clear winner, after London mayor Boris Johnson threw his weight behind the "leave" campaign.

A weaker pound actually benefits many stocks on the blue-chip FTSE 100, which has substantial international exposure.

JP Morgan upgraded UK equities to "overweight" from "underweight", a position it had held for three years, despite the risk of Brexit.

"The JPM base case is that UK stays in Europe, but admittedly it is likely to be a close call. Once the campaigning starts in earnest, we believe that the bulk of businesses will fall in the 'stay' camp," analysts at JP Morgan said in a note.

"In the event of UK leaving, the initial knee-jerk impact on the market could be quite negative, but we believe the resulting GBP weakness and BoE action will cushion a chunk of the fall in equities."

British stocks nevertheless underperformed European equities on Monday, with more domestically-exposed mid-cap and small-cap indexes lagging further behind, up only 0.8 percent.

At the bottom of the FTSE 100 index, HSBC dropped 4 percent after an underwhelming set of results for 2015, as it also confirmed that it was under investigation by U.S (Other OTC: UBGXF - news) . regulators in relation to its hiring practices of people tied to government officials in Asia.

Profit before tax at $18.87 billion, little changed on the year before and well below an average analysts' estimate of $21.8 billion, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data, dragged down by an unexpected $858 million loss in the fourth quarter. (Editing by Catherine Evans)