UPDATE 3-FTSE 100 dragged down by Unilever, positive earnings push mid-caps

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* Unilever top FTSE 100 loser, cuts margin guidance

* FirstGroup jumps on increase in shareholder returns

* Workspace jumps on strong office space demand outlook

* FTSE 100 down 0.4%, FTSE 250 adds 0.6%
(Updates to close)

By Shashank Nayar

July 22 (Reuters) - London's FTSE 100 ended lower on
Thursday, weighed down by weakness in Unilever shares after it
cut its full-year margin forecasts coupled with a fall in energy
stocks, while the mid-cap index rose on a set of positive
corporate results.

The blue-chip FTSE 100 index dropped 0.4% with
Unilever being the main drag, while energy stocks
fell 1.6%, despite a jump in oil prices.

Unilever Plc was down 5.9% after it warned that
surging commodity costs would squeeze its full-year operating
margin, overshadowing strong second-quarter sales
growth.

"Markets appear to be caught in a pincer movement between
concerns over rising inflation, and slowing growth ... this is
no better reflected in the latest numbers from Unilever," said
Michael Hewson, chief market analyst at CMC Markets.

However, commentary from Bank of England's deputy governor
Ben Broadbent helped calm some of the inflation fears after he
said the current spike in prices is unlikely to create
longer-term inflation pressures.

The domestically focussed mid-cap index rose for the
third straight session to end 0.6% higher, helped by upbeat
quarterly results from Howden Joinery Group and IG
Group.

The blue-chip FTSE 100 index has gained 7.9% so far this
year, helped by government stimulus and re-opening optimism, but
is nearly 11% away from its all-time high. It is still
underperforming the mid-cap index, which is just 1.2% away from
its record high.

British retailers and manufacturers have grown optimistic on
growth prospects as the economy bounces back from the pandemic
lockdowns, research showed, with UK manufacturers' expectations
for growth in output over the next three months being strongest
on record.

Among stocks, transport firm FirstGroup jumped 3.1%
after it increased its planned shareholder returns by 135
million pounds ($185.29 million).

Workspace Group Plc gained 1.7% after it said it
expected strong signs of businesses in London returning to work
with easing of pandemic-related restrictions.

(Reporting by Shashank Nayar in Bengaluru; Editing by
Uttaresh.V and Arun Koyyur, William Maclean and David Evans)