By Sudip Kar-Gupta
LONDON (Reuters) - Britain's blue-chip shares index fell on Monday but outperformed other European bourses, as widespread unease about the country's looming European Union membership vote weighed on markets.
The blue-chip FTSE 100 index (FTSE) was down 0.7 percent at 6,075.47 points.
This was less than falls of 1.2 percent on Germany's DAX (GDAXI) and a 1.5 percent fall on the pan-European STOXX 600 index (STOXX) as two leading banks stayed "overweight" on UK equities.
Both Deutsche Bank (DE:DBKGn) and JP Morgan argued the UK market could outperform Europe if Britain did vote to leave the EU in a referendum next week, as UK shares would be propped up by a fall in sterling.
A drop in the pound would make British shares more affordable for overseas investors, and benefit many of the internationally-focused companies that dominate the FTSE 100.
That view was echoed by Marino Valensise, Head of Multi-Asset & Income at Baring Asset Management.
"We would expect sterling to weaken in case of Brexit and multinational company shares to perform better than domestic ones," he said.
The FTSE 100 index has outperformed Europe so far this year in percentage terms, down 3 percent while the pan-European FTSEurofirst 300 (FTEU3) and STOXX 600 indexes have fallen around 10 percent.
Among mid-cap stocks, G4S (L:GFS) dropped 5.4 percent in the wake of Sunday's fatal Orlando nightclub shootings, carried out by one of the global security company's employees.
While the majority of investors still expect next week's in/out vote to result in Britain deciding to stay in the EU, opinion polls remain divided.
The chances that Britain will vote to leave the EU increased sharply on Monday to 36 percent, the highest level since the June 23 referendum was announced by Prime Minister David Cameron four months ago, according to betting odds.
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Mike Dolan, Markets Editor EMEA.