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* FTSE 100 flat while European stocks fall
* Smith & Nephew falls 6.2 pct after results
* Glencore boosted by stronger outlook
* Weaker services PMI dents sterling, boosts FTSE
By Helen Reid
LONDON, May 3 (Reuters) - A strong outlook from miner Glencore and gains in oil stocks provided the bedrock for British shares to outperform stock markets on the continent on Thursday.
Mining and energy stocks helped the FTSE stay flat while euro zone stocks declined 0.2 percent. A survey showing Britain’s services sector struggled to recover in April dented sterling, boosting the index to a session high.
Oil majors BP and Royal Dutch Shell delivered the biggest boost to the index, while miners Glencore, Antofagasta and Evraz also rose strongly.
Glencore shares rose 2 percent, nabbing the top spot on the FTSE, after the commodities trader and miner said it expected 2018 earnings from its trading division to be at the top end of its previously forecast range.
Miners in general were supported by stronger metals prices as trade talks between the U.S. and China began.
Results dominated trading with sharp falls for some stocks, but investors remained positive on the overall picture for the UK earnings season.
Shares in Smith & Nephew were on track for their worst day in nine years, down 6.4 percent after Europe’s biggest artificial hip and knee maker downgraded its revenue and profit forecasts following a weak first quarter.
Britain’s leading stock index has enjoyed a rapid revival in recent weeks. It is up a hefty 9.5 percent since it hit a 15-month low as recently as March 26.
“I would not be surprised if we continue to see very strong UK equities numbers and a really quite material rerating,” said Guy Monson, chief investment officer at Sarasin & Partners, adding that if this final stage of Brexit talks results in a settlement there could be a flight back into UK equities.
“We have been tactically adding on dark days,” he added, saying he was keeping a UK focus “for a real backing of the underdog.”
Heavyweight stocks G4S, LSE, Kingfisher and Mondi going ex-dividend shaved 4.7 points off the FTSE 100.
The FTSE 250 edged down 0.1 percent, weighed by industrials stocks after IMI results sent its shares down 3.4 percent.
Property and casualty insurer Lancashire led the index, up 4 percent after reporting a jump in profits, and saying oil prices would boost energy insurance demand this year and next.
Go Ahead Group tumbled 7.7 percent after Deutsche Bank downgraded the stock to ‘hold’ from ‘buy’, saying that in the absence of future rail franchise wins it is no longer clear the shares are significantly undervalued.
Inbound M&A interest in British assets continued apace with French property group Fonciere des Regions buying 14 upmarket hotels in Britain from Starwood Capital for 858 million pounds ($1.2 billion).
The deal would also see InterContinental Hotels Group sign long-term leases for 13 of those 14 hotels and subsequently rebranding and running them.
“We have seen absolutely record levels of M&A,” said Sarasin’s Monson.
“The deal market began the year dotted with a few intra-UK announcements, but has since seen a flurry of large inbound acquisition attempts,” said Liberum strategists.
“These stocks have offered growing revenue and international exposure at a depressed valuation.”
Reporting by Helen Reid Editing by Keith Weir