Royal Mail drops as Greek stalemate weighs on Britain's FTSE

* FTSE 100 down 0.3 pct

* Greek talks breakdown hits European stock markets

* Morgan Stanley (Xetra: 885836 - news) price target cut impacts Royal Mail (LSE: RMG.L - news)

By Sudip Kar-Gupta

LONDON, Feb 17 (Reuters) - Britain's top equity index fell on Tuesday, as a breakdown in talks over Greece's debt rescue package weighed on European stock markets, while a broker's price target cut hit Royal Mail.

The blue-chip FTSE 100 index was down 0.3 percent at 6,833.87 points in early trading.

European markets fell after debt talks between Greece and euro zone finance ministers debt broke down on Monday.

"Another breakdown in communication, another nearly-signed agreement, and another day with the Greek debt crisis unresolved," said Spreadex financial analyst Connor Campbell.

Royal Mail was among the worst-performing FTSE 100 stocks in percentage terms, falling 2.6 percent after investment bank Morgan Stanley cut its price target.

Hantec Markets' analyst Richard Perry said European equities had been relatively resilient to the uncertainty in Athens due to the European Central Bank's forthcoming government bond-buying plan aimed at boosting the region's economy via quantitative easing (QE).

"The reaction to Greece is not as negative as you could have imagined, as you've still got this underlying support from QE," he said.

The FTSE reached a peak last year of 6,904.86 points, its highest since early 2000, before losing ground at the end of 2014. The index is up around 4 percent so far in 2015.

"I'm still pretty neutral on the FTSE," added Perry. (Reporting by Sudip Kar-Gupta; editing by John Stonestreet)