UPDATE 1-FTSE falters as Brexit hopes lift pound; domestic stocks rejoice

Shashwat Awasthi

* FTSE 100 down 0.3%, FTSE 250 up 0.8%

* Brexit deal hopes lift sterling, hit exporters

* Housebuilders, UK banks jump

* WPP, Burberry fall after European rivals cut forecast

* Dart Group climbs higher after hiking profit view (Adds news items, analyst comments, updates share prices)

Oct 11 (Reuters) - Britain's exporter-heavy FTSE 100 lagged a trade sentiment-induced rally in global stocks on Friday, as hopes that a Brexit deal may be clinched by the end of the month lifted the pound and hammered international firms.

The blue-chip index, whose components book nearly two-thirds of their earnings in the U.S. dollar, shed 0.3%, as sterling firmed after Ireland sounded optimism on the chances of Britain leaving the European Union in an orderly fashion.

"Some EU officials may not agree, but it was enough to light a fire underneath sterling," Spreadex analyst Connor Campbell wrote.

Exporter stocks such as Diageo, BAT and Unilever dragged the most, while healthcare firms AstraZeneca and GlaxoSmithKline also skidded.

However, stocks considered most sensitive to any Brexit updates such as housebuilders and UK-focussed banks advanced, and the domestically-focussed mid-cap index jumped 0.8% by 0744 GMT.

Shares of major blue-chip homebuilders Persimmon, Barratt, Berkeley and Taylor Wimpey added between 3.7%-5.6%, while RBS and Lloyds also rose more than 4% each.

The FTSE 100 fell behind the broader European benchmark , as well as Asian stocks, which rose after U.S. President Donald Trump stirred hopes of a trade agreement with China, calling the first day of talks "very good."

"Given the price action of the last 24 hours, one could argue the foundations of this rally (in global stocks) have more sand then cement," Oanda analyst Jeffrey Halley said.

"It will only take one negative comment to crack the edifice and thus, staying on the sidelines and out of danger is still the more sensible strategy."

The main index was also hurt by a near 4% drop in ad firm WPP after French rival Publicis cut its sales view for the second time, and a 3% fall in luxury brand Burberry after German rival Hugo Boss cut its annual forecast.

AIM-listed Dart Group surged 12% after the owner of British airline and tour operator Jet2 raised its annual profit view and said it had seen stronger demand for some products since Thomas Cook collapsed.

The FTSE had confirmed a "Death Cross" pattern in the previous session as its 50-day moving average (DMA) crossed below the 200 DMA, a technical pattern usually seen as a warning that more losses are likely in the near term. (Reporting by Shashwat Awasthi in Bengaluru; Editing by Bernard Orr)