UK stocks muted as Starmer leadership crisis rattles investor sentiment

May 13 (Reuters) - UK stocks were little changed on Wednesday, underperforming the European benchmark, as domestic political uncertainty and questions over Prime Minister Keir Starmer's future weighed on sentiment.

The blue-chip FTSE 100 index .FTSE edged 0.03% higher as of 11:07 am GMT, while the midcap FTSE 250 .FTMC dipped 0.1%.

Investors, already unsettled by the Middle East impasse and rising oil prices, are contending with fresh uncertainty over the government's leadership, with a stream of headlines casting doubt on Starmer's ability to stay at the helm.

Health minister Wes Streeting is ‌preparing to resign and could quit as early as Thursday, the Times reported on Wednesday, adding that ​he is likely to mount a ​formal challenge for the party leadership.

That came despite Starmer's plea to voters and his party's lawmakers to stick with him and avoid a leadership contest he said would only bring chaos.

"The Prime Minister may be 'forced' to step down if enough ministers resign. His defenestration seems to be a matter of when rather than if," said Robert Wood, Chief UK economist at Pantheon Macroeconomics.

Auto stocks .FTNMX401010 fell 2.3%, while industrial miners .FTNMX551020 rose 3%. Information analytics company Relx REL.L was the biggest loser on the FTSE 100, down 2.4% as concerns over disruption from AI lingered.

Investors were also worried that a potential successor to Starmer might advocate for increased spending, despite Britain's already strained finances.

"The likely replacements would probably not be as fiscally disciplined. A discretionary loosening in fiscal policy is on the way regardless of who is PM," said Ruth Gregory, deputy chief UK economist at Capital Economics.

Meanwhile, U.S. President Donald Trump's state visit to China for talks with Chinese President Xi Jinping is in focus.

Trump told reporters he does not need Beijing's help to end the war with Iran, but the high-stakes meeting is expected to include discussions on trade, Taiwan and Iran.