* FTSE down 1.5 pct at close
* GKN eyes sale of auto unit (Recasts, adds detail, quote and updates prices at close)
By Julien Ponthus and Kit Rees
LONDON, March 2 (Reuters) - The UK's top share index hit itslowest level in more than a year on Friday on concerns overtrade disputes and as a speech by Prime Minister Theresa Mayleft many unconvinced that a post-Brexit deal with the EU wasany closer.
At its close, the FTSE was down 1.5 percent at 7,069.90points at its lowest since December 2016, unnerved by PresidentDonald Trump's promise to tax aluminium and steel imports.
While initial reaction to May's speech was muted, both theblue chip FTSE 100 and sterling drifted lower as it ended withthe prim minister saying "no deal is still better than a baddeal in Brexit talks". wasn't much for traders to latch on to," said DavidMadden, market analyst at CMC Markets UK, adding that 'no deal'could prove costly.
The FTSE usually rises when sterling falls owing to theFTSE's high proportion of internationally-exposed firms, whichbenefit from a weaker local currency.
London-listed steel producer Evraz EVRE.L was down 0.9percent, as fears of rising U.S. protectionism and an escalatingtrade war with Asia hit the share prices of Europeansteelmakers.
Shares in miners Rio Tinto RIO.L and BHP Billiton BLT.L ,which have large iron ore exposure, were more than 3 percentlower and among the biggest FTSE 100 fallers. RTO.L rebounded after falling during the previoussession on disappointing 2017 results. The British businessservices group gained 3.6 percent.
Paper and packaging firm Mondi MNDI.L was the biggestgainer, up nearly 4 percent after announcing a special dividendafter resuming profit growth. Stock Exchange Group LSE.L fell 2.7 percent afterreporting its 2017 results as traders noted higher costs. engineering company GKN GKN.L was down 3.5percent. It said it was in talks with Dana Incorporated DAN.N over its auto unit, opening up a new front in an attempt tofight off a hostile 7 billion pound ($9.6 billion) bid fromMelrose Industries MRON.L .