By Shashank Nayar
(Reuters) - London's mid-cap index rose on Tuesday to the highest in nearly three weeks after signs of progress in Brexit talks boosted market sentiment while the FTSE 100 ended flat as a stronger pound pressured the export-heavy index.
Britain and the EU are close to agreement on reciprocal social security rights for their citizens after Brexit, two diplomatic sources said, with one describing talks last week on an elusive trade deal as "one of the most positive so far".
The FTSE 250 index <.FTMC>, viewed as a barometer for Brexit sentiment, ended Tuesday's session 1.2% higher and gained for the fourth session in five while the blue-chip index <.FTSE> ended flat.
"Majority of the optimism comes from hopes of fresh U.S. stimulus measures following President Trump's return to the White House while news of positive developments on the Brexit front also helped support investor sentiment," said Connor Campbell, a financial analyst at SpreadEx.
A raft of stimulus measures and re-opening optimism have helped the FTSE 100 bounce from its March lows.
However, rising economic stress due to a resurgence of COVID-19 cases and a stronger pound have kept the index in a tight range.
A UK hospitality sector trade body warned on more than half a million job losses after the government's furlough scheme ends this month as movement curbs continue to hurt the sector.
However, Britain's Finance Minister Rishi Sunak said he will prioritise trying to save jobs over tax rises while the COVID-19 pandemic batters the economy. He also said the country cannot sustain record public borrowings.
Frankie and Benny's owner Restaurant Group <RTN.L> gained 4.5% after it unveiled improved like-for-like sales numbers for the period since the start of July.
Premier Oil <PMO.L> jumped 2.04% after it reached an all-share merger deal with oil exploration and production company Chrysaor.
(Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu and David Gregorio)