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UPDATE 2-Rising HK tensions, trade angst knock FTSE; domestic shares rally

By Muvija M and Shashwat Awasthi

* FTSE 100 down 0.4%, FTSE 250 up 0.3%

* Stocks vulnerable to Asia dive on Hong Kong tensions

* Trade sentiment uncertain

* Baker Greggs jumps after forecast upgrade

* Election update lifts pound, domestic stocks (Adds news items, analyst comments, updates to closing prices)

By Muvija M and Shashwat Awasthi

Nov 11 (Reuters) - A mix of rising tensions in Hong Kong, dampened U.S.-China trade sentiment and a firmer pound hit the exporter-heavy FTSE 100 on Monday, while domestic stocks rallied after the Brexit Party lent some clarity ahead of the Dec. 12 election.

The FTSE 100 slid 0.4% as a violent escalation of protests in Hong Kong knocked nearly 2% off Asia-exposed banks HSBC and StanChart and drove mining stocks lower.

The main bourse handed back nearly all the gains it accumulated last week, as the latest Chinese data disappointed and U.S. President Donald Trump cast doubt on the progress of trade negotiations with Beijing.

The FTSE 250, dominated by more domestically focused firms, added 0.3%. Baker Greggs soared 16.5% after it forecast annual earnings ahead of expectations, its best day since floating more than three decades ago.

While expectedly downbeat domestic growth figures did little to move the needle, sterling jumped after Brexit Party leader Nigel Farage said he would not contest Conservative-held seats in the election.

"Price action suggests that the possibility of fewer obstacles in the way of an outright Conservative Party majority would be welcomed by sterling buyers," Cityindex analyst Ken Odeluga said.

"Given the fact that a bigger Parliamentary Tory party could pass Boris Johnson's Brexit deal more easily, uncertainty that has hamstrung Britain's economy would be curtailed."

JPMorgan's basket of London-listed companies that make their cash at home surged 1.3% and enjoyed its best day in nearly a month.

Brexit-sensitive stocks such as housebuilders also cheered the news, with blue-chips Taylor Wimpey, Persimmon , Barratt and Berkeley up 2%-3.6%.

Political developments helped alleviate some gloom cast by a Moody's report in which the rating agency had warned it may cut Britain's sovereign debt rating again.

Small-cap Sirius Minerals ended 8.4% higher, having surged nearly 40% earlier, as the fertiliser maker produced a revised development plan for its North Yorkshire polyhalite project.

AIM-listed ECO Animal Health shed 24% and hit its lowest level in almost five years after the veterinary medicines maker blamed an outbreak of African swine fever and the trade war for a hit to its performance. (Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Saumyadeb Chakrabarty and Mark Heinrich)