UPDATE 1-UK midcaps start fourth quarter with gains; hopes for Brexit deal grow

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* FTSE 100 flat, FTSE 250 up 0.4%

* Investors hope for resolution to Brexit chaos

* Ferguson rises after FY results (Adds company news items, analyst quotes, updates share prices)

By Muvija M and Shashwat Awasthi

Oct 1 (Reuters) - Prospects of a Brexit resolution lifted UK mid-cap stocks on Tuesday as Prime Minister Boris Johnson prepared to present his plans for an amended divorce deal to the European Union, while the exporter-heavy FTSE 100 pared gains due to a stronger pound.

The FTSE 250 gained 0.4% with all but one sector in positive territory, while the blue-chip bourse turned flat by 0748 GMT.

Supporting the main index was plumbing parts distributor Ferguson, which rose nearly 4% and was set for its best day in four months after it posted a better-than-expected rise in earnings thanks to cost-cutting moves.

On the other hand, AstraZeneca slipped 1% after the U.S. Food and Drug Administration declined to approve the company's combination therapy to treat smoker's lung and retailer JD Sports lost 2% as its Footasylum deal was referred to an in-depth investigation.

Blue-chip components with a greater reliance on the British economy gained as investors were quick to welcome the Brexit update that raised the possibility of an end to over three years of back and forth between UK and the European bloc.

Prime Minister Johnson is set to submit his proposals for an amended agreement that includes new alternatives to remove the controversial insurance policy for the Irish border that Britain had previously agreed to.

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Gains follow losses for both UK indexes in the last quarter compared to rises in major indexes on the Wall Street and in Europe, but the outlook for the current three months is not as bad according to BlackRock analysts.

"We expect a pickup in global growth in the next six to 12 months, as policy stimulus gradually filters through to the real economy," BlackRock analysts wrote in their weekly note.

The Sino-U.S. trade dispute has roiled financial markets this year, causing the FTSE 100 to suffer its biggest monthly drop this year in August when tensions flared up.

The world's two biggest economies are set to resume talks next weak to try and work out their conflicts.

Story continues

"We see some possibility of a truce," BlackRock analysts said.

Steps from central banks across the globe to aid a growth slowdown also offered some relief to markets in recent weeks.

In other news, takeaway food group Greggs slumped 6% after it reported a slowdown in sales growth, while Integrafin tumbled 7% to the bottom of the FTSE 250 index after its co-founder trimmed his stake. (Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Bernard Orr)

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