Investors expect British stocks to end this year more or less unchanged, sticking close to their current levels, as worries over the approaching divorce date with the European Union rein in stock market gains.

A Reuters poll of more than 30 fund managers, brokers and analysts conducted in recent weeks predicted a median gain of 1.5 percent for the FTSE 100 across 2018, to end the year at 7,800 points - which would be 2.2 percent up from Tuesday's close.

The FTSE 100 is set to lag an expected 5.6 percent gain for the euro zone's largest companies <.STOXX50E> this year.

Respondents saw Brexit negotiations as key, given the index's sensitivity to sterling which has remained under pressure since Britons voted, nearly two years ago, to exit the European Union.

"The UK market will ebb and flow with the success or otherwise of Brexit negotiations," said Gary Waite, portfolio manager at Walker Crips.

Investors polled by Reuters saw the FTSE 100 rising to 7,900 points by the middle of 2019, after the deadline for Britain's formal exit from the EU at the end of March.

The index would fall back again to trade at 7,850 points by the end of that year, however, according to the median.

Led higher by gains for its large, dollar-earning constituents, the FTSE 100 has risen around 25 percent since the June 2016 Brexit vote.

Even though the pound has clawed its way back to its highest level since taking a plunge in the immediate aftermath of the referendum result in June 2016, it remains nearly 11 percent below its pre-vote level and is expected to be volatile.

But despite the boost from the currency, the FTSE is down 0.7 percent so far this year.

Rising inflation and sluggish growth have hit businesses and consumers alike, with a number of high-profile profit warnings from Debenhams, Greggs, Carpetright and Micro Focus, to name a few, and the collapse of outsourcer Carillion giving investors reason to be cautious over investing in Britain.

"UK economic growth expectations are weakening and Brexit remains a longer-term threat," said Craig Hoyda, senior quantitative analyst at Aberdeen Standard Investments, adding that he is underweight the market.

Britain's economy almost stagnated in the first quarter, recording GDP growth of just 0.1 percent as falling business investment and weak household spending took their toll.

But some investors are being tempted to take another look at UK equities given the relatively cheap valuations. The broader FTSE 350 index <.FTLC> trades at a 7.3 percent discount to world equities.

"We saw the Q1 dip in the FTSE 100 as the most tradeable opportunity so far. We bought that dip," said Paul O'Connor, head of multi-asset at Janus Henderson.

Divergent destinies for the FTSE 100 index of mostly international earners, large multinational companies, and the mid- and small-cap parts of the market, were not as clear-cut as they had been for a long time after the Brexit referendum.

"Our attention has been drawn more to domestic facing companies in recent months but the recent weakness in sterling could attract capital to the larger multi-nationals too," said Charles Glasse, director at Waverton Investment Management.

Having traded around in line with the FTSE 100 in terms of valuations since the Brexit vote, mid-caps are now more expensive. The FTSE 250 was last trading at 14.8 times next year's earnings, while the FTSE 100 was trading at 13.9 times - below its 20-year average valuation.

But for some, ongoing Brexit uncertainty continues to be a deterrent.

"We believe there are better growth opportunities outside the UK where you don’t need to take on this level of political risk," said Edward Park, investment director at Brooks Macdonald.

(Reporting by Helen Reid, Kit Rees and the stocks team in London; Editing by Alison Williams)

By Helen Reid and Kit Rees