Slump in Smiths Group weighs on UK's FTSE 100

* Smiths Group (Other OTC: SMGKF - news) falls 6.1 pct after lower profits

* FTSE 100 edges down in mid-session trading

* Market awaits Osborne's budget speech

By Sudip Kar-Gupta

LONDON, March 19 (Reuters) - A slump in the shares of engineering company Smiths Group weighed on Britain's top equity index on Wednesday, as Smiths joined a list of companies affected by the strength of sterling.

The blue-chip FTSE 100 index, which rose 14.4 percent in 2013 and was close to a 13-year high in January, slipped by 0.1 percent, or 5.87 points, to 6,599.41 points in mid-session trading.

Smiths Group plunged 6.1 percent, making it the worst-performing blue chip in brisk trade after it said first-half profits fell 3 percent due to a strong pound that reduced the U.S.-dominant manufacturer's margins.

"Investors in Smiths Group can be forgiven for feelings of exasperation and even despair this morning. It just isn't doing what it says on the tin," said Steve Clayton, equity research partner at Mirabaud Securities.

A gradual recovery in the British economy has propped up sterling, but a stronger currency risks hurting companies exporting overseas.

Investors were waiting for British finance minister George Osborne's annual budget later in the day, with some analysts noting that any reaction in sterling could affect the stock market.

"Sterling strength has been quite a big factor in the downgrades that we've seen, particularly from some of the FTSE 100 more globally exposed stocks ... if that could continue to reverse that would probably be quite helpful for sentiment," Peel Hunt equity strategist Ian Williams said.

The FTSE is down by around 2 percent since the start of 2014, but many traders expect the stock market to recover later this year to hit a record high of 7,000 points as the UK's economic recovery continues.

"We're still in an uptrend for now. I expect record highs to come mid-April or early May," said JNF Capital trader Rick Jones. (Additional reporting by Tricia Wright; Editing by Susan Fenton)