UPDATE 2-FTSE 100 dips as pound climbs; Persimmon knocks housebuilders

Britain's FTSE 100 turned lower on Monday afternoon as the pound climbed on EU comments about a possible delay to Brexit, while housebuilders were hit by reports the government is worried about how Persimmon implements a state house-funding scheme. The FTSE 100 was 0.1 percent lower at 1328 GMT, lagging other major European bourses where investors took comfort from U.S. President Donald Trump's decision to delay raising tariffs on Chinese imports.

The FTSE 250 was down 0.4 percent. The pound gained after European Council President Donald Tusk said delaying Brexit beyond the planned March 29 exit date would be a "rational solution" as there was no majority in the British parliament to approve a divorce deal.

Raymond James analyst Chris Bailey said a delay was "clearly a positive so long as it is a delay that leads to clarity over Brexit ... the stock market is most worried about the proximity of the Brexit end of March period." Sterling's rise weighed on the exporter-heavy FTSE 100, while homebuilders dipped to a one-month low on reports Britain's housing minister is pressing Persimmon on how it operates a public funding scheme for new house buyers.

Persimmon slumped 6 percent on the main index, leading down rivals Taylor Wimpey, Barratt. Bunzl fell 4 percent after the company said its margins remained under pressure from rising costs, even as its full-year profit beat expectations.

Primark owner Associated British Foods fell 2 percent after guiding to flat first-half earnings. The company's finance chief separately said it was "unbelievable" the British government was contemplating a no-deal Brexit. Prime Minister Theresa May has put off a parliamentary vote on her Brexit deal until March 12, which lawmakers see as a tactic to get more of them to back her plan - already rejected once - in an attempt to avoid a split from the EU without an agreement.

"Maybe she is thinking some MPs who don't like her deal may like it in two weeks time when there is very little time left on the clock," said CMC Markets analyst David Madden. Also weighing on markets were data from the Confederation of British Industry showing the country's services industry was its gloomiest since the 2009 financial crisis, caused by the "unmistakably negative" impact of Brexit uncertainty.

Centamin dropped 22 percent, on track for its worst day in more than four years, as its annual gold production fell and a 2019 production forecast missed Jefferies' estimates. Bucking the trend, sub-prime lender Provident Financial rose 4 percent after rejecting an unsolicited takeover offer from smaller rival Non-Standard Finance (NSF). NSF slumped 7 percent, its worst one-day fall in more than a year. (Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Larry King and Mark Potter)