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FTSE shrugs off Brexit impasse while Convatec and Superdry sink

FILE PHOTO - Traders looks at financial information on computer screens on the IG Index trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson (Reuters)

By Danilo Masoni and Helen Reid

MILAN/LONDON (Reuters) - Britain's top share index managed a modest gain on Monday as a deadlock in Brexit talks depressed domestic stocks but helped multinational exporter companies as it weakened the pound.

The FTSE 100 <.FTSE> reversed early losses to climb 0.5 percent while the domestically focused mid-cap index <.FTMC> fell 0.9 percent, dragged down by profit warnings from ConvaTec and Superdry.

The FTSE outperformed the pan-European STOXX 600 index <.STOXX>, which rose 0.2 percent. Oil majors BP <BP.L> and Shell <RDSa.L> also helped support the index as crude prices climbed.

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The stubborn problem of Britain's land border with Ireland thwarted a drive to clinch a Brexit deal before a European Union summit this week, as negotiators admitted defeat after marathon talks and pressed pause for the coming days.

Sterling slipped to near a one-week low.

"A draft withdrawal agreement is more likely to be announced at an extraordinary EU summit in November (likely 17-18 November) than... at this week's scheduled October summit," wrote Goldman Sachs analysts.

Shares in multinationals British American Tobacco <BATS.L>, Unilever <ULVR.L>, Imperial Brands <IMB.L> and Reckitt Benckiser <RB.L> provided the biggest boost, rising as the weaker pound made their dollar earnings relatively more valuable.

Shares in precious metal miners Randgold Resources <RRS.L> and Fresnillo <FRES.L> were top gainers, up 5.2 and 4.1 percent respectively, as gold rose around 1 percent to its highest in about 2-1/2 months. [GOL/]

Financials, which are more exposed to the domestic economy, were the biggest drag on the FTSE, with banks Lloyds <LLOY.L> and Barclays <BARC.L> down 0.8 and 1.1 percent respectively.

Analysts expect any no-deal scenario to lead to a significant downward revision to Britain's economic growth, with sterling likely to fall further under such a scenario.

Profit warnings causing severe falls in mid-caps ConvaTec and Superdry stole the show.

The medical devices maker ConvaTec <CTEC.L> plunged 33.1 percent after lowering its expectations for revenues and margins, citing a change in inventory policy by its largest customer in its Infusion Devices business.

"ConvaTec's pre-released results and revised 2018 guidance leave us with little hope for meaningful improvement in earnings trajectory within the next 2 years," wrote UBS analysts.

"Revenue growth continues to disappoint, margin trajectory is negative and senior management turnover continues with the CEO's sudden departure."

Fashion group Superdry <SDRY.L> warned that 2018-19 profit could be as much as 17 percent below current expectations, blaming a hit to sales from unseasonably hot weather and rising foreign exchange costs. Its shares sank 21.2 percent.

(Reporting by Danilo Masoni and Helen Reid; Editing by Kevin Liffey)