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FTSE edges up but profit warnings sink Pendragon, Dialight

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* FTSE 100 up 0.1 pct

* GKN leads on report company might split

* CRH seals deal with Ash Grove Cement

* Rebuffed Mediclinic bid drives Spire higher

* Profit warning slashes Pendragon's shares

LONDON, Oct 23 (Reuters) - Britain's main share index started the week with a modest gain, led by engineering group GKN while Mediclinic shares fell after its bid for Spire Healthcare was rebuffed.

The FTSE 100 was up 0.1 percent by 0830 GMT, while the FTSE 250, which hit a record high last week, fell back 0.2 percent.

Profit warnings in the UK market have multiplied in the past weeks, and the latest to cut expectations on Monday were car dealership Pendragon and lighting products maker Dialight, sending their shares down 16 to 19 percent.

Banks were the biggest weight among large-caps, with RBS , Barclays and Standard Chartered all among top fallers, tracking a slide in European bank stocks as political uncertainty over Catalonia weighed.

Engineering group GKN led large-cap gainers, up 3.2 percent after a report the company was considering splitting into two separately listed firms for its aerospace and auto component divisions.

The firm was also boosted by an upgrade to "hold" from "sell" by Liberum analysts, who said disposals, a declining pension deficit and new management improving free cash flow could all push GKN's shares higher.

Construction firm CRH gained 2.2 percent after U.S. cements manufacturer Ash Grove Cement approved its $3.5 billion bid for the firm.

"Confirmation of Ash Grove's approval means that CRH will now acquire the fifth largest U.S. cement producer," said Davy Research analysts. "The deal is a real coup for CRH," they added, saying it would reduce CRH's dependence on third-party providers.

Among mid-caps Spire Healthcare soared more than 13 percent, set for its best ever one-day gain, after Britain's second largest healthcare firm rebuffed a full takeover offer from its largest shareholder Mediclinic.

The South African private healthcare provider meanwhile fell 2 percent, the top FTSE 100 faller.

Car dealership chain Pendragon plummeted more than 16 percent after saying full-year profits would not meet previous guidance, blaming falling demand for new cars creating a price correction in the used car market.

Shares in rival car dealerships Inchcape and Lookers were also down 5 and 5.8 percent respectively.

Industrial lighting products maker Dialight also sank 19 percent after it cut its full-year earnings expectations, citing short-term production challenges.

Profit warnings for UK companies have jumped to 75 in the third quarter, the biggest quarterly rise in nearly six years, consultancy EY reported.

Pierre Bose, head of European equity strategy at Credit Suisse said more profit warnings from UK companies were to be expected if the economy's growth continued to deteriorate.

"We need results on the Brexit talks because from a corporate perspective, for investment spending, you need better clarity," he added.

In a note, Credit Suisse said that despite the UK market benefiting from a global cyclical upturn, it faces significant economic and political challenges. The bank remains neutral on UK equities.

"The UK is obviously that much more sentiment driven, Brexit focused and currency focused," said Bose, pointing to slower economic growth, inflation and an absence of wage growth weighing on the market.

(Reporting by Helen Reid; Editing by Raissa Kasolowsky)