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* FTSE 100 up 0.5 pct
* South Africa exposed stocks dip
* Financials, energy drive gains
* Sophos hits all-time high
* Small-cap Nanoco drops 19 pct
By Helen Reid
LONDON, April 4 (Reuters) - British shares outperformed European peers on Tuesday, boosted by strength in energy and industrials, while South Africa exposed companies were under pressure after S&P downgraded the country's credit rating to sub-investment grade.
Britain's FTSE 100 was up 0.4 percent by 0845GMT, outperforming the more hesitant Europe-wide STOXX 600.
The index was little changed after PMI data showed British construction growth slowed in March.
Gold miners Randgold Resources and Fresnillo were among top gainers, up 1.5 to 1.8 percent. Distributor and outsourcer Bunzl was a top gainer, up 2 percent after it said it bought two safety workwear businesses: ML Kishigo in the U.S. and Neri in Italy.
"Two further bolt-on deals should enhance EPS by c.1% and evidence that conversion of the M&A pipeline is not slowing," said Jefferies analysts in a note.
South Africa exposed stocks tracked the rand lower, after it dropped sharply after credit ratings agency S&P downgraded the country to sub-investment grade, and Moody's said its rating was under review for a downgrade.
South African bank and asset manager Investec was down 2.1 percent. It has dropped 13 percent since the day before finance minister Pravin Gordhan was sacked.
Insurer Old Mutual was the worst-performing blue-chip stock, down 2.2 percent, while South Africa exposed healthcare provider Mediclinic was down 2.3 percent.
"It's not a huge surprise South Africa has lost its investment-grade credit rating, so markets will likely have an initial reprice in terms of corporate exposure, but it would require further economic changes to drive a more prolonged sell-off," said Ed Park, investment director at Brooks Macdonald.
GKN, which makes engines and components for cars, was down 2 percent, tracking Europe-wide losses in the auto sector, the worst-performing on the day, down 1.6 percent.
Supermarket Sainsbury was down 1.4 percent, after Kantar Worldpanel data showed sales at the major British retailer dipped slightly in the first quarter while they increased at discount competitors Aldi and Lidl.
Among mid-caps, meanwhile, valve maker Rotork was up 4.7 percent and set for its best day in four months.
JP Morgan upgraded the firm, which is exposed to a recovery in oil and gas markets, to 'overweight', saying its earnings power had increased.
"The group remains well positioned to benefit from the recovery, and growth opportunities exist outside of just oil & gas capex," the bank said.
Sophos hit an all-time high, up 11.5 percent after the IT security firm reported billings ahead of consensus.
Nanoco Group was the top small-cap faller, down 19 percent and through more than five days of average daily volume after the maker of quantum dots - semiconductor nanocrystals used in displays - said sales did not materialise in the second half, and cut its full year expectations. (Reporting by Helen Reid; Editing by Andrew Bolton)