UPDATE 1-Hard Brexit won't hit us, 60% of Germany's small and medium-sized firms say

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BERLIN, Oct 11 (Reuters) - Around 60% of Germany's Mittelstand, the small and medium-sized companies that form the backbone of Europe's biggest economy, see no impact on their business from a hard Brexit, a survey by Germany's KfW state development bank showed on Friday.

With the United Kingdom due to leave the world's biggest trading bloc on Oct. 31, Brexit remains deeply uncertain; it remains unclear on what terms it will leave or indeed whether it will leave at all.

The KfW survey of around 2,000 firms with annual revenues of up to 500 million euros ($550.60 million) found that about a quarter of Germany's Mittelstand expected a hard Brexit to disadvantage them.

"Shortly before what might be a hard Brexit, the German Mittelstand is largely keeping its cool: It's only a matter of concern for a small proportion of companies," said KfW economist Jennifer Abel-Koch.

The German economy contracted in the second quarter and many economists expect it to slip into a recession in the third quarter, with the possibility of Brexit a risk for the overall economy that is largely dependent on exports.

The KfW survey found that 15% of Germany's export-oriented services providers such as law, tax and business consultancies, actually expect a hard Brexit to help them.

KfW said reduced competition from rivals in Britain could play a role in these firms' optimism, as well as an increased need for consulting from companies who need to adjust their business relationships if there is a hard Brexit.

Mittelstand companies that have made comprehensive preparations for a hard Brexit are few and far between, with four out of five saying they have not taken any precautions whatsoever as they are not directly impacted, the survey conducted from 11 to 23 September found.

($1 = 0.9081 euros) (Reporting by Michelle Martin Editing by Tassilo Hummel and Thomas Escritt)