Renewed trade fears weigh on FTSE 100 while Rolls Royce roars up

* Rolls Royce up 13 pct after results

* Paddy Power Betfair tumbles 5 pct

* Hill & Smith leads FTSE 250

* WPP hit by report P&G cutting ad agency spending

By Helen Reid

LONDON, March 7 (Reuters) - A two-day rally of Britishstocks ran out of steam on Wednesday after the resignation ofU.S. economic advisor Gary Cohn caused global investors to fretover the U.S. administration's shift towards protectionism,stoking fears of a trade war.

The FTSE 100 was flat by 0926 GMT, outperformingEuropean peers thanks to strong gains in engine maker RollsRoyce after results. The blue-chip index still languished near14-month lows hit last week.

"Whilst the rhetoric has clearly increased in recent days,particularly with the timing of Gary Cohn's departure, the keytests are whether Donald Trump proceeds to sign this order butalso what other nations do in response," said Edward Park,investment director at Brooks Macdonald in London.

Trade fears caused metals prices to slip, driving minersGlencore, Anglo American, BHP Billitonand Rio Tinto down 1.9 to 2.4 percent.

Oil prices also tumbled, sending oil majors BP andRoyal Dutch Shell down 0.7 percent.

Rolls Royce shares charged ahead, up 14.1 percentafter its turnaround plan boosted profit ahead of expectations.

The sharp rise in share price could be down to investorsunwinding short positions in the stock, traders said.

Astec Analytics data showed the cost to borrow Rolls Royceshares has risen over the past month, indicating increasedinterest in shorting the stock leading up to these results.

Just Eat shares recovered slightly from the previousday's results-driven losses, up 2.8 percent.

Paddy Power Betfair shares however fell 5 percent,the worst-performing on the FTSE after the betting companyreported full-year results in which analysts said lower guidancedisappointed investors.

"Increased investment in brand and international expansionis likely to equate to a reduction in our 2018 EBITDA forecastof circa 20 million pounds, or 4 percent," wrote Davy Researchanalysts.

WPP was also a notable faller, down 1.8 percentafter the latest blow to the advertising agency model which hascome under increased pressure.

U.S. consumer goods giant Procter & Gamble was reported tobe cutting ad agency spending by $1.25 billion over the nextthree years to focus on internal analytics instead.

French advertising peer Publicis fell 2 percent tothe bottom of the CAC 40.

Hill & Smith shares jumped 10 percent, set fortheir best day in nearly two years, after the infrastructureproducts maker reported record revenue and profits in itsfull-year results.

"The outlook is generally positive across the Group, withany progress on a Trump infrastructure plan likely to helpsentiment," N+1 Singer analysts wrote, adding there may also bepotential for M&A.

Overall analysts have been revising earnings lower for theFTSE 100 in the past weeks as the index struggles at 14-monthlows.

(Reporting by Helen ReidEditing by Raissa Kasolowsky)