UPDATE 2-FTSE 100 flat as Brexit worries weigh on pound; Broader Europe slips

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* Call between European commission head and UK PM underway
* UK says prepared to leave EU without a trade deal
* German factories gloomier about production in coming
months -Ifo
* Banks lead losses as European bond yields drop
* U.S. preparing new sanctions on Chinese officials

(Updates to close)
By Susan Mathew
Dec 7 (Reuters) - A battered pound on growing fears of
Brexit without a trade deal buoyed London's blue-chip index on
Monday, while other major European indexes slipped as rising
tension between the United States and China sapped appetite for
risky assets.
London's mid-caps index .FTMC lost over 1%, while the
blue-chip index .FTSE closed up 0.1% after gaining as much as
0.8% in the session. .L
The FTSE 100 outperformed regional peers, thanks to a
hammered pound as Brexit negotiators struggled over differences
on fishing rights, fair competition and ways to solve future
disputes. GBP/
The United Kingdom said it would not extend the Dec. 31
deadline to leave the bloc, and that it is prepared for an exit
without a trade deal. All eyes were on the outcome of a call at
1600 GMT between British Prime Minister Boris Johnson and
European Commission President Ursula von der Leyen. "The true deadline (for a deal) will likely be at some point
at the end of this week, which could mean a week full of drama,"
said Edward Moya, senior market analyst at OANDA in New York.
Failure to secure a deal would clog borders, upset financial
markets and disrupt delicate supply chains across Europe and
beyond. Fitch on Monday said a no-deal scenario would have more
severe impact on UK's GDP than expected. After adding about 14% over the last five weeks, the
pan-European STOXX 600 index .STOXX fell up to 1% before
closing down 0.3%.
Sentiment was dulled also by worries over U.S.-China
relations after Reuters reported that United States was
preparing to impose sanctions on at least a dozen Chinese
officials over their alleged role in Beijing's disqualification
of elected opposition legislators in Hong Kong. The news cast a shadow on data that showed German industrial
output rose much more than expected in October. Adding to the
gloom, the Ifo institute said production expectations for
Europe's largest economy have deteriorated for the coming
months. Germany's trade-sensitive DAX index .GDAXI lost 0.2%.
Banks .SX7P led losses in Europe as euro zone bonds yields
fell. Finance-heavy indexes in Spain .IBEX and Italy .FTMIB
slipped more than 0.5%, while France's CAC 40 .FCHI fell 0.6%
after scaling a more than nine-month high on Friday. GVD/EUR
Limiting losses, tech stocks .SX8P added 0.4%.
Oil stocks .SXEP slipped 0.4%. A continued surge in
coronavirus cases globally pressured crude prices as it forced a
series of renewed lockdowns. O/R
Investors also await the outcome of a European Central Bank
meeting on Thursday, with more emergency bond buying and cheap
liquidity for banks eyed.