Weaker sterling gives FTSE edge over Europe, Micro Focus dips

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* FTSE 100 up 0.4 pct

* Weak sterling, strong miners boost blue-chips

* Micro Focus wilts as CS warns on legacy tech

* Macquarie upgrade drives Cairn Energy (LSE: CNE.L - news) higher

* Short seller targets Paysafe

By Helen Reid

LONDON, May 22 (Reuters) - The pound's retreat below $1.30 helped Britain's main share index outperform European benchmarks on Monday, while individual broker updates sent some stocks lower.

Sterling fell after two polls on the weekend showed Prime Minister Theresa May's ruling Conservative party losing ground after parts of its election manifesto came under fire. The pound had risen in the last month as some expected a landslide win would allow for smoother exit negotiations with the European Union.

Along with strength in commodities stocks, the weaker pound propelled the mainly foreign-earning FTSE 100 to a 0.4 percent gain, holding near record high levels hit last week, and easily outperforming the Euro zone STOXX 600 which fell 0.2 percent.

Strong metals prices helped miners Anglo American (LSE: AAL.L - news) , Fresnillo (Frankfurt: A0MVZE - news) , Antofagasta (Other OTC: ANFGF - news) and Rio Tinto (Hanover: CRA1.HA - news) up to the top of the index, gaining 1 to 1.3 percent.

While merger activity drove European shares, broker updates fuelled the biggest moves among British stocks.

Micro Focus fell 3.1 percent, the top FTSE faller after Credit Suisse (IOB: 0QP5.IL - news) research into legacy technology led them to downgrade the firm.

The bank's survey of 100 CIOs found the industry was moving away from COBOL, a programming language widely used in business and finance, and the base for some Micro Focus tools and products.

"Just as investors finally seem to have accepted management's view that legacy assets are sticky, we think the risks to this model are starting to materialise," said analysts at the Swiss bank.

Testing company Intertek jumped to a record high after Kepler Cheuvreux upgraded it to a 'buy' in a note predicting an inflection in the cycle for the sector.

"Strategic initiatives are delivering quick results, allowing Intertek to free up cash that CEO André Lacroix (Paris: FR0000066607 - news) has promised to redeploy into earnings-accretive acquisitions," analysts added.

Paddy Power Betfair (Other OTC: PDYPF - news) gained 1.9 percent after Credit Suisse upgraded it to neutral, assessing companies' exposure to regulatory risks from the UK government's review of gambling machines.

Analysts said the outlook for 2018 looked better for PPB, flagging Australia as 'the key regulatory threat'.

Among mid-caps, Cairn Energy benefited from a target price upgrade from Macquarie.

"We recommend buying the shares ahead of share price appreciation associated with Senegal progress and commencement of cash flow generation in the UK North Sea," analysts said.

Paysafe fell 3 percent after anonymous short-seller outfit Spotlight Research targeted the company again, with two new reports.

The firm's shares had plummeted 40 percent in December after an initial report from the short seller. They've since recovered and hit an 11-year high on Friday.

Miners Ferrexpo and Kaz Minerals (LSE: KAZ.L - news) underpinned a 0.3 percent gain on the mid-cap index as well. (Reporting by Helen Reid; Editing by Raissa Kasolowsky)