Renewed trade fears weigh on FTSE 100 while Rolls Royce roars up

* Rolls Royce (LSE: RR.L - news) up 13 pct after results

* Paddy Power Betfair (Other OTC: PDYPF - news) tumbles 5 pct

* Hill & Smith (Stuttgart: 7HL.SG - news) leads FTSE 250

* WPP (Frankfurt: A1J2BZ - news) hit by report P&G cutting ad agency spending

By Helen Reid

LONDON, March 7 (Reuters) - A two-day rally of British stocks ran out of steam on Wednesday after the resignation of U.S. economic advisor Gary Cohn caused global investors to fret over the U.S. administration's shift towards protectionism, stoking fears of a trade war.

The FTSE 100 was flat by 0926 GMT, outperforming European peers thanks to strong gains in engine maker Rolls Royce after results. The blue-chip index still languished near 14-month lows hit last week.

"Whilst the rhetoric has clearly increased in recent days, particularly with the timing of Gary Cohn's departure, the key tests are whether Donald Trump proceeds to sign this order but also what other nations do in response," said Edward Park, investment director at Brooks Macdonald (LSE: BRK.L - news) in London.

Trade fears caused metals prices to slip, driving miners Glencore (Frankfurt: 8GC.F - news) , Anglo American (LSE: AAL.L - news) , BHP Billiton (NYSE: BBL - news) and Rio Tinto (Hanover: CRA1.HA - news) down 1.9 to 2.4 percent.

Oil prices also tumbled, sending oil majors BP and Royal Dutch Shell (LSE: 0LN9.L - news) down 0.7 percent.

Rolls Royce shares charged ahead, up 14.1 percent after its turnaround plan boosted profit ahead of expectations.

The sharp rise in share price could be down to investors unwinding short positions in the stock, traders said.

Astec Analytics data showed the cost to borrow Rolls Royce shares has risen over the past month, indicating increased interest in shorting the stock leading up to these results.

Just Eat (Frankfurt: A1100K - news) shares recovered slightly from the previous day's results-driven losses, up 2.8 percent.

Paddy Power Betfair shares however fell 5 percent, the worst-performing on the FTSE after the betting company reported full-year results in which analysts said lower guidance disappointed investors.

"Increased investment in brand and international expansion is likely to equate to a reduction in our 2018 EBITDA forecast of circa 20 million pounds, or 4 percent," wrote Davy Research analysts.

WPP was also a notable faller, down 1.8 percent after the latest blow to the advertising agency model which has come under increased pressure.

U.S. consumer goods giant Procter & Gamble (Swiss: PG-USD.SW - news) was reported to be cutting ad agency spending by $1.25 billion over the next three years to focus on internal analytics instead.

French advertising peer Publicis (Paris: FR0000130577 - news) fell 2 percent to the bottom of the CAC 40.

Hill & Smith shares jumped 10 percent, set for their best day in nearly two years, after the infrastructure products maker reported record revenue and profits in its full-year results.

"The outlook is generally positive across the Group, with any progress on a Trump infrastructure plan likely to help sentiment," N+1 Singer analysts wrote, adding there may also be potential for M&A.

Overall analysts have been revising earnings lower for the FTSE 100 in the past weeks as the index struggles at 14-month lows.

(Reporting by Helen Reid Editing by Raissa Kasolowsky)