Weak sterling supports UK's FTSE ahead of Brexit trigger, mid caps struggle

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* FTSE 100 up 0.1 pct

* Sterling fall supports blue chips

* Mid caps slightly lower

* 3I rises after upgrade

By Kit Rees

LONDON, March 29 (Reuters) - A fall in sterling ahead of the formal triggering of the Brexit divorce process helped to keep Britain's index of leading shares on an even keel on Wednesday.

The blue chip FTSE 100 index was flat in percentage terms at 7,349.43 points by 0913 GMT, retreating slightly from a stronger open. The more domestically-focused British mid cap index slipped 0.1 percent.

British Prime Minister Theresa May is set to file formal divorce papers on Wednesday, notifying EU Council President Donald Tusk in a letter that the UK is leaving the bloc it joined in 1973.

While last year's June referendum vote to leave the European Union spurred a sharp sell-off in equities, Britain's FTSE 100 recovered swiftly and is up more than 16 percent from pre-Brexit levels, and has also hit a series of record highs this year.

The FTSE 100's predominantly international, dollar-earning firms have received an accounting-related boost from the weaker pound, which sunk more than 8 percent in the immediate aftermath of the vote and remains down almost 17 percent from pre-Brexit levels.

"It's all about the pound. Any weakness in the pound will see the FTSE 100 push that bit higher," said Dafydd Davies, partner at Charles Hanover Investments.

"The banks are a key sector to be keeping a very keen eye on, and of course also any inward-looking UK-listed companies stand to be particularly volatile in relation to the agreements or any guidance that we do get later on in the day."

Though individual stock moves were relatively muted, shares in 3I Group were the biggest gainers, up 2.7 percent after Morgan Stanley (Xetra: 885836 - news) upgraded the private equity firm to "overweight".

"We believe Action could be worth €10bn+ (more than 250p per 3i share). This is not reflected in 3i's share price, so we upgrade to Overweight," analysts at Morgan Stanley said in a note.

EU Antitrust regulators blocked a proposed merger of Deutsche Boerse (IOB: 0H3T.IL - news) and the London Stock Exchange (Other OTC: LDNXF - news) , saying that the deal would have harmed competition because of the companies' combined market power. Shares (Berlin: DI6.BE - news) in LSE rose 1.8 percent.

Mining firms also provided support, with BHP Billiton (NYSE: BBL - news) and Antofagasta (Other OTC: ANFGF - news) gaining 1.2 percent and 0.8 percent respectively as the price of copper hit its highest level in more than a week.

Gold miners Randgold Resources and Fresnillo (Amsterdam: FN6.AS - news) were the biggest FTSE fallers as the price of gold slipped.

Outside of the blue chips, AA (Frankfurt: A116XA - news) dropped 4 percent after brokers chewed over Tuesday's full-year results, while shares in Acacia Mining (Frankfurt: 33A.F - news) also fell 3.4 percent after JP Morgan (Other OTC: MGHL - news) downgraded the gold miner to "neutral". (Reporting by Kit Rees; Editing by Keith Weir)