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UPDATE 1-FTSE 100 gets sterling boost, land purchase threat dents housebuilders

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* FTSE 100 and mid-caps up 0.5 pct as budget dominates

* Growth forecast cut weighs on sterling, boosts FTSE

* Housebuilders fall on review of unused planning permissions

* Banks steady after Hammond's speech

* Thomas Cook slides as UK margins shrink (Adds quotes, updates prices after budget)

LONDON, Nov 22 (Reuters) - Britain's top share index touched a session high as finance minister Philip Hammond delivered his budget statement on Wednesday, boosted by a dip in sterling as Brexit-bound Britain slashed economic growth forecasts.

Housebuilding stocks swung sharply, losing ground after Hammond announced a review of unused planning permissions though a stamp duty exemption to spur house buying offered some support to the sector.

After a lacklustre start to the day, the FTSE 100 was up 0.5 percent after the budget speech, close to where it was before Hammond started speaking.

Hammond, walking a tightrope between managing weak public finances and offering sweeteners to win back voters, had little room for the bold moves demanded by many in his Conservative party to help households after years of spending cuts.

Sterling fell sharply on the growth downgrade before recovering to trade roughly flat, and the FTSE traded just off its earlier highs.

Housebuilders hit a session high, up 1.6 percent, before falling back to trade up 0.6 percent after Hammond said the government would review unused planning permissions and consider compulsory purchases if sites were being withheld for commercial rather than technical reasons.

Barratt Development, Persimmon and Berkeley were the worst-performing FTSE stocks, down 2.2 to 2.7 percent.

"On one hand it's going to encourage housebuilders to use their land bank ... but if you are suddenly getting a flood of properties or land banks being used in the short term the market might think it could depress prices," said Paul Mumford, UK fund manager at Cavendish Asset Management.

The benefits from the stamp duty exemption could trigger demand in the short term, he said.

The housebuilding sector has been among the best performing in the UK this year, up 9.4 percent.

Dollar earners including Shire and Reckit Benckiser were among top gainers as sterling suffered. Reckit was also helped by an upgrade to "overweight" from JP Morgan.

Among other movers, Thomas Cook was the stand-out, down 8.7 percent after results.

The mid-cap tour operator revealed shrinking UK margins after four consecutive years of profit growth, indicating competition in the sector was heating up.

"This is much worse than expected despite TCG flagging margin pressure through the year," said Barclays analysts.

"The major issue is exposure to Spain (c. 44 percent of UK business) - ... TCG needs to remix capacity away from Spain," they added.

Financials were the biggest contributors to index gains with Standard Chartered up 4.2 percent after sources said the bank was close to selling its real estate principal finance unit to private equity firm Actis. (Reporting by Helen Reid; Editing by Elaine Hardcastle and John Stonestreet)