* FTSE down 0.3 percent
* JPMorgan upgrades UK stocks to neutral
* IAG falls after outage
* consumers drag, oils provide support
By Danilo Masoni
MILAN, May 30 (Reuters) - British blue chips fell slightly on Tuesday as sterling inched higher less than two weeks before a general election that will shape talks for the country's exit from the European Union.
The FTSE 100 was down 0.3 percent by 0913 GMT as it reopened after a long holiday weekend, while mid-caps were 0.2 percent lower.
The blue chip index, however, stayed near a record high hit on Friday after a run aided by a fall in the pound since Britain's vote in June to exit the EU.
British Airways owner IAG was a top faller on the FTSE, down 2.8 percent, on the first day of trading following massive weekend disruption to flights due to an IT outage.
"British Airways faces all kinds of questions in the wake of its IT failure and investors are rightly turning a bit cautious. It's estimated that the cost of the fiasco might be around 100 million euros, or around 5 percent of pre-tax profits this year," said ETX Capital analyst Neil Wilson.
Other airlines also fell, including Ryanair which reported record annual profits but its shares fell 0.2 percent as the results were in line with market expectations.
Shares in rival easyJet were down about 1.5 pct.
Commodity stocks provided some support to the blue chip index with heavyweight oil major BP up 0.2 percent and miner Glencore rising 0.8 percent.
Top weights were consumer stocks such as British American Tobacco and Diageo, both down more than 1 percent.
The FTSE is up around 5 percent this year compared to the 10 percent rise for euro zone stocks.
JPMorgan recommended buying into blue chip, dividend-paying exporters that stand to benefit the most from a weak sterling.
Sterling rose against the dollar on Tuesday as investors shrugged off opinion polls showing British Prime Minister Theresa May's lead over the Labour opposition narrowing less than two weeks before the election.
However JPMorgan said it expected sterling's appreciation against the dollar to halt and UK stocks to claw back some of their underperformance against global peers.
"We think UK is becoming interesting in the regional allocation again," JPMorgan strategists said in a note, upgrading the country's stocks to neutral. (Reporting by Danilo Masoni; Editing by Susan Fenton)