By Kit Rees and Helen Reid
LONDON (Reuters) - Britain's major share index fell on Friday but had its strongest weekly gains in two months, sheltered from the battering European stocks experienced at the mercy of a strong euro, while mid-caps had their best week in nearly a year.
Britain's FTSE 100 (FTSE) index was down 0.5 percent, substantially outperforming European bourses, having earlier hit its highest level since mid-June.
The relative weakness of the pound, close to an eight-month low against the euro, helped limit losses on the index whose exporting constituents tend to gain with a falling currency.
The blue-chip stocks made a 1 percent gain on the week, their best weekly performance since May.
Meanwhile mid-caps (FTMC) sealed their best weekly gains in nearly a year, up 1.8 percent on the week, though they dipped 0.1 percent on Friday.
They were boosted higher this week by a recovery in construction contractor Carillion (L:CLLN), which plummeted last week, and strongly received results from Weir Group (L:WEIR) and Sports Direct (L:SPD).
"People have been indiscriminately selling the FTSE 250 and buying the FTSE 100, but contrary to what everyone thinks, there are all sorts of opportunities in the mid and small-cap indexes," said Mark Martin, manager of the Neptune UK Opportunities fund.
Mid-caps (FTMC) are up 9.2 percent this year, about double the performance of their larger FTSE 100 counterparts.
On Friday shares in Paysafe (L:PAYS) rocketing 6.8 percent after a consortium of Blackstone (N:BX) and CVC Capital Partners (UL:CVC) made a 2.86 billion pound ($3.72 billion) bid for the firm, the latest move in a spate of deal-making in the payments industry.
"On first impressions the acquisition appears to make sense, is not a particularly high multiple in the context of payments and we would estimate potential EPS accretion of around 10 percent," UBS analysts said in a note.
Among blue-chips betting firm Paddy Power Betfair (I:PPB) led losers, down 3.3 percent after a double downgrade from Investec.
"PPB should remain among the top five global listed online gambling stocks and so still deserves a premium rating, though below the current level," Investec analysts said.
But they added they saw shorter-term pressure for the shares as the market prices in punter-friendly sports results and a worsening regulatory outlook.
Vodafone (L:VOD) shares pared gains to trade up 0.5 percent after hitting a one-month high as it reported better-than-expected revenue growth for its first quarter thanks to a strong performance in Italy and Spain.
"Whilst there's nothing here to kick-start a higher quantum of growth in the medium-term, the efficiency programme and the cash generation plans look to have remained on track," Ken Odeluga, market analyst at City Index, said.
Healthcare was a rare bright spot, with Convatec (L:CTEC) and Shire (L:SHP) up 1.7 to 1.9 percent.
At the opposite end of the spectrum, shares in mid-cap Acacia Mining (L:ACAA) plummeted 17 percent after the troubled gold miner said its output would fall to the lower end of its full-year guidance after its first-half results were hit by Tanzania's export ban.
