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TalkTalk, Royal Mail earnings spice up FTSE 100 trading

* FTSE 100 edges up 0.3 percent

* Royal Mail (LSE: RMG.L - news) rises on strong parcel growth

* Paddy Power Betfair (Other OTC: PDYPF - news) hit by downgrade

* TalkTalk tops FTSE 250 after strong results (Adds detail, updates prices at close)

By Helen Reid and Kit Rees

LONDON, July 17 (Reuters) - Britain's top share index climbed on Tuesday as encouraging results flowed in from companies including Royal Mail and TalkTalk, though uncertainty over Brexit capped gains.

The FTSE 100 ended the session up 0.3 percent at 7,626.44 points, in line with European benchmarks which were boosted by U.S. Fed Chair Jerome Powell's upbeat assessment of the U.S. economy in his testimony.

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Results drove the lion's share of moves.

Royal Mail Group rose 1.8 percent, paring back some earlier gains, after its results showed better than expected parcel growth.

The stock is highly shorted and the volume of shares on loan has increased at pace since April, according to Astec Analytics data - meaning any good news tends to boost the share price disproportionately as short sellers unwind their trades.

Analysts noted, however, that the guidance for letter volumes was more negative due to new data privacy regulation GDPR.

"We suspect the GDPR effect has only just begun and will likely accelerate as consumers realise just how easily they can opt out of junk mail," said Ameet Patel, senior analyst for Northern Trust Capital Markets.

Telecoms firm TalkTalk jumped to the top of the FTSE 250, rising 8 percent after its results showed strong subscriber growth with 80,000 adds.

"All this is broadly in line but the real focus is tomorrow's AGM and what investors will say about the 200 million pound rights issue earlier this year," said Neil Wilson, chief market analyst at Markets.com.

In other mid-cap movers construction company Galliford Try (Stuttgart: 0GF.SG - news) rose 4 percent after it forecast lower debt levels for the year ended June 30.

Bookmaker Paddy Power Betfair declined 3.2 percent, the biggest faller on the FTSE 100, after Investec (LSE: INVP.L - news) downgraded the stock to "sell".

"While Paddy Power Betfair has significant first mover advantage in the U.S., we caution that, especially post the recent re-rating, it is very much a long-term value driven strategy," said Investec analysts in a note.

Morgan Advanced Materials (Other OTC: MCRUF - news) got boosted 4.8 percent by an upgrade from JP Morgan.

"After close to three years of management actions without seeing the full benefits, we believe we are at the tipping point and over the next 12 to 24 months the upside to earnings and to shareholders will become clear," JP Morgan analysts wrote.

The FTSE 100, long the laggard among European benchmarks, is no longer the worst-performing this year, as Germany's DAX and Spain's IBEX take its place at the bottom of the chart.

(Reporting by Helen Reid and Kit Rees Editing by Alison Williams)