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* FTSE 100 index finishes up 0.1 pct
* Weak sterling supports index
* Motor insurers hit by rate change
By Helen Reid
LONDON, Feb 27 (Reuters) - Britain's top share index closed slightly higher on Monday, helped by earnings updates and weak sterling, although motor insurers were hit by a regulatory change that could lead to higher payouts.
The broader market was helped by sterling, which fell after talk of another possible Scottish independence vote added to fears about Britain's future as it prepares to leave the European Union.
A weaker pound often helps the blue-chip FTSE 100, because the index is dominated by globally focused firms. The benchmark index finished 0.1 percent higher and was set to end the month up more than 2 percent, after retreating last month.
Companies such as Unilever, Bunzl and Convatec were among the top gainers.
Business supplies firm Bunzl posted better-than-expected results, boosting it to the top of the FTSE, up 3.4 percent. Convatec, the medical supplies company, was up 1 percent.
Unilever was up 1.5 percent. Near Friday's close Chief Financial Officer Graeme Pitkethly said the Kraft Heinz bid had been a "trigger moment" for Unilever to focus more on short-term value creation.
However, motor insurers came under pressure, with shares in Admiral and Direct Line falling 2.5 percent and 7.2 percent respectively.
They were hit by the government's reduction of a rate which discounts certain large motor claims. The Ministry of Justice cut the discount rate to minus 0.75 percent from 2.5 percent .
"We expect today's change to lead to premium price increases, in addition to those required to pass on ongoing non-bodily injury claims inflation," UBS analysts said in a note.
Direct Line said it expected profit before tax to fall by 215 million to 230 million pounds. Consultancy PwC said the rate change would add 50 to 75 pounds to the average motor insurance policy.
London Stock Exchange also fell after its plans to merge with Deutsche Boerse faltered. LSE said it believed the European Commission is unlikely to clear the merger with its German peer. LSE shares finished 3.2 percent lower.
RBS was down 1.1 percent, maintaining Friday's move down after the bank's results disappointed. Retailer ABF , which owns discount fashion brand Primark, fell 0.9 percent after its results.
"Primark's subdued like-for-like and upcoming margin headwinds are unlikely to prove conducive to continued near-term valuation rebuild," said Jefferies analysts, who have a 'hold' rating on the stock. (Additional reporting by Atul Prakash; Editing by Larry King)