(Reuters) - Britain's benchmark index fell on Thursday, but was on track for a strong weekly gain on the last day of a holiday-truncated week primarily due to potential tariff exemptions by U.S. President Donald Trump.

The FTSE 100 index was down 0.7% and the mid-cap FTSE 250 index lost 0.4%, as of 10:40 GMT on Thursday; for the week, they were up 3.1% and 3.6%, respectively.

Investors were set for a long weekend, with UK markets closed on the following day for Good Friday and on Monday for Easter.

Leading the losses on Thursday, the automobiles and parts index dropped 3.2%.

Defence stocks Rolls Royce and BAE Systems slipped 2.8% and 2.6%, respectively, weighing significantly on the benchmark index.

Precious metals and mining index slipped 1% after eight straight sessions of gains. For the week, the sub-index outperformed its peers, climbing 7.6%, benefiting from higher gold prices on safe-haven demand.

British stocks gained momentum earlier this week after the U.S. indicated potential exemptions on auto-related levies on Mexico, Canada and other places.

Elsewhere, the European Central Bank's interest rate decision at 1215 GMT is on the radar. Traders see a quarter-point cut by the central bank to cushion the struggling European Union economy against U.S. tariffs.

Among individual stocks, Sainsbury's ticked up 2.6% after Britain's second-largest food retailer forecast flat profit this year as it pledged to sustain its competitive edge if a price war emerges.

Man Group fell 3% after the hedge fund said its assets under management fell by about $5.6 billion in the two weeks to April 14.

British meal delivery company Deliveroo rose 3.7% after its orders in the first quarter jumped 7%, beating the 6% recorded in the final quarter of 2024.

(Reporting by Nikhil Sharma in Bengaluru; Editing by Sahal Muhammed)