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* FTSE 100 down 0.8 pct
* Sterling surge dents demand for blue chips
* Mid caps rally in biggest outperformance since 2009
* Mining stocks among biggest fallers (Live coverage of European markets now available on cpurl://apps.cp./cms/?pageId=livemarkets)
By Alistair Smout and Kit Rees
LONDON, Nov 3 (Reuters) - Britain's top share index fell onThursday after the government lost a court case on how totrigger the process for leaving the European Union and the Bankof England shifted away from cutting interest rates further.
The blue chip FTSE 100 index was down 0.8 percent at6,790.51 points by the close, lagging the broader Europeanmarket which was broadly positive.
The mid cap FTSE 250, however, rose 0.7 percent.
That divergence saw the spread between mid cap performanceand blue chips hit its widest since April 2009, before mid capspared gains heading into the close.
The FTSE 100 fell after England's High Court ruled the UKgovernment required parliament's approval to trigger thecountry's exit from the European Union.
This, and the news from the Bank of England, sent the poundhigher. The FTSE 100 has high international exposure, with manyfirms earning dollars and reporting profits in sterling. Thatcan cause shares to fall when the pound rises.
The mid caps, which are domestically focused, rallied alongwith the pound on hopes that any exit from the European Unionwould be made smoother by additional scrutiny from parliament.
"This decision has increased the uncertainty around the UK'sdecision to leave the EU ... The FTSE 100 is lower, but this islargely a result of global equity weakness and the FTSE's inverse correlation with the pound," Kathleen Brooks, Head ofResearch at City Index, said in a note.
"For the UK, uncertainty is good, because the market hasconvinced itself that Brexit is bad news for the UK's futureeconomic prospects."
Sterling then hit a 4-week high after the Bank of Englandscrapped plans to cut interest rates again and said they couldmove in either direction as it ramped up its forecasts forgrowth and inflation in 2017.
The FTSE 100 has rallied around 7 percent since Britonsvoted to leave the European Union in June, driven by gains amongits international, dollar-earning firms that were boosted by adrop in sterling.
Mining companies were the biggest fallers, with RandgoldResources dropping 6.2 percent after its update andpulling peer Fresnillo down 4.3 percent.
In contrast, big domestic earners were among the top risers,with Royal Bank of Scotland up 6.1 percent.
British supermarket stocks were in demand, with Morrison up around 1 percent after it reported a fourthconsecutive quarter of underlying sales growth. Peer Sainsbury also rose, up 2.3 percent. (Editing by Keith Weir and Mark Potter)
