UK markets close in 6 hours 44 minutes

N.Korea setback, sterling weigh on FTSE but mid-caps shine

* FTSE 100 down 0.9 pct

* Retail sales beat forecasts, boosting pound

* Mediclinic tumbles after results

* Paddy Power Betfair (Other OTC: PDYPF - news) rises on U.S. merger

* Strong earnings lift Electrocomponents (LSE: ECM.L - news) , Tate & Lyle (LSE: TATE.L - news) (Adds closing prices, context)

By Helen Reid and Julien Ponthus

LONDON, May 24 (Reuters) - President Donald Trump's decision to cancel a summit with North Korean leader Kim Jong Un weighed on British shares in afternoon trading, while gains in sterling prompted by better retail sales data also bruised the internationally-exposed FTSE 100.

The blue chip index closed down 0.92 percent at 7,716.74 points as global markets took a hit when Trump announced he had called off the June 12 summit "based on the tremendous anger and open hostility" from Pyongyang.

"Market reaction betrayed surprise," said Ken Odeluga, a market analyst at City Index. "Session lows were seen almost immediately across Wall Street, Frankfurt, London (and) Treasury yields, whilst spot gold spiked to an eight-session high."

A surprise fall in British inflation pushed sterling lower against the dollar, adding headwind to companies whose revenues are in foreign currencies.

Shares (Berlin: DI6.BE - news) in Mediclinic were the worst performers of the session as the London-listed South African private hospital group took a hefty $863 million writedown on its Swiss business.

British testing company Intertek Group (Other OTC: IKTSF - news) posted the highest gains with a 3.4 percent rise after it reported a 4.4 percent rise in revenue.

Paddy Power Betfair came second, up 2.6 percent after the gambling company sealed the merger of its U.S. business with fantasy sports company FanDuel.

"This places PPB in a strong position to participate in the deregulation of sports betting in the U.S.," said Stifel analysts.

Goldman Sachs (NYSE: GS-PB - news) analysts valued the total market opportunity from U.S. liberalisation of sports betting at $36.5 billion-$60.8 billion in revenues, basing their estimates on growth trends in the more developed British and Australian markets.

Kingfisher (Frankfurt: 812861 - news) shares fell three percent at the open after Europe's second largest home improvement retailer said sales in its latest quarter were hit by unusually bad weather keeping shoppers at home. However, they recovered to close up 0.5 percent.

The broader FTSE 250 spent most of the session in positive territory and ended the day only 0.07 percent lower thanks to strong earnings.

Electrocomponents shares led the way, jumping 16.1 percent after the electrical equipment firm raised its dividend and reported double-digit annual profit growth.

Waste-to-product group Renewi's shares added 8.2 percent on strong profits while Tate & Lyle rose 7.3 percent after the food ingredients firm reported higher annual profits.

Britain's FTSE 100 has been underperforming global stocks recently but analysts are turning more positive on the outlook for UK stocks, including the more domestically-focused markets.

"The FTSE 100 hit a record high this week, but the bigger story has been one of steady and notable underperformance versus other world equity markets over the last couple of years," said UBS (LSE: 0QNR.L - news) analysts.

"We see more interesting opportunities within the market, particularly the domestics," they added.

(Reporting by Helen Reid, Editing by William Maclean and David Stamp)