UPDATE 2-Brexit concerns, mounting pressure on PM May drag British stocks down

Britain's mid-cap index and domestically-focused blue-chip stocks were weighed down Thursday by heightened concerns over the course of Brexit and mounting pressure on Prime Minister Theresa May to step down. As the pound fell, the FTSE 250 lost 1.4% to hit its lowest since March 29, when Britain was originally scheduled to leave the European Union. Dublin's main index, often seen as a barometer of Brexit jitters, was down nearly 2%.

Britain-focused banks and industrial stocks on the FTSE 100 drove the main index lower. It was down 1% by 0852 GMT. "For sterling it will depend entirely on what, or rather who, is next (as UK prime minister). In the interim we should expect volatility in sterling crosses to remain elevated," Markets.com analyst Neil Wilson said.

"Anyone hoping for a quick resolution to the current impasse is likely to be disappointed, and a big win for the Brexit party in today's (European) elections could complicate matters further," said CMC Markets analyst Michael Hewson. But the blue-chip index fared better than its European peers as sterling's slide helped its exporter stocks gain despite lingering global trade concerns. A survey by Barclays showed more Britons would opt for "staycations" this year over heading for trips abroad, with 18% of them citing the impact of Brexit on travel and finances. This hurt tour operator TUI, which fell 4.4%. Shares of easyJet shed 2.8%, IAG lost 2.3%, while small-cap Thomas Cook tumbled 6%.

Ex-dividend trading further knocked the main index with Morrisons, Imperial Brands and DCC among those affected. Mid-cap outsourcing firm Serco jumped 8.2%, on course for its best day in more than five months, after saying it would buy U.S. Navy supplier Alion's Naval Systems Business Unit. Madame Tussauds-owner Merlin Entertainments advanced 4% after hedge fund ValueAct urged it explore a go-private deal, calculating the move could boost the company's value by around a third.