* FTSE 100 up 0.7%, FTSE 250 rises nearly 1%
* Technical glitch causes more than 1-1/2 hour delay
* All blue-chip sectors ended in the black
* Financials biggest support after China stimulus (Adds news items, analyst comment, updates share prices to close)
By Muvija M and Yadarisa Shabong
Aug 16 (Reuters) - UK shares rebounded on Friday after the London Stock Exchange's longest outage in years, with more stimulus plans from China bolstering the blue-chips and increased optimism about Britain avoiding a disruptive no-deal Brexit lifting the mid-caps.
The main index rose 0.7% with all sectors in the black, while the FTSE 250 index outperformed with a 1% rise owing to gains in the local currency. Both indexes recouped some of the steep declines suffered in the last two sessions.
The outage, which was the longest in eight years and delayed trading for almost two hours, came during a volatile week for global financial markets, which were hit by worries about an impending recession and a prolonged U.S.-China trade spat.
Shares of LSE rose 1.9%.
The FTSE 100's weekly run, which had dragged the index to six-month lows at one point, has placed it on course for its worst month in nearly four years.
On Friday, however, the index was boosted by shares of financial companies, particularly those with a bigger exposure to Asia, after China's state planner said it would roll out a plan to boost disposable income for 2019-2020 to revive consumption as the economy slows.
U-TURN FROM RECESSION
A report that Germany would be prepared to ditch its balanced budget rule and take on new debt to counter a possible recession also helped the banks break a 5-day losing streak and rise 1.6%. The index has been pressured recently amid the Hong Kong protests.
"Working on the hopeful assumption that central banks are going to step in and try and force the global economy into a U-turn away from a recession, the markets were fairly uniform in their gains," Spreadex analyst Connor Campbell said.
Precious metals miner Fresnillo, however, fell 1.1% as gold prices fell on investors locking in profits after a strong run.
At home, growing momentum among politicians to stop Britain from crashing out of the European Union without any agreement has buoyed the pound, in turn aiding the domestically-focussed FTSE 250 index.
Among news-driven moves, Mr Kipling owner Premier Foods added 1.2% after Sky News reported overnight that former Reckitt Benckiser CFO Colin Day was among leading contenders to become Premier Foods chairman.
Prudential inched 1% lower after a UK High Court blocked the transfer of 12 billion pounds in annuities from the insurer to Rothesay Life.
AIM-listed Burford Capital, which had jumped in the last session after replacing its CFO, slumped 8.8%. Shares in the litigation funder have plunged over 40% since coming under attack from short-seller Muddy Waters. (Reporting by Muvija M, Shashwat Awasthi and Yadarisa Shabong in Bengaluru Editing by Bernard Orr, Anil D'Silva and Frances Kerry)