By Shashank Nayar and Amal S
(Reuters) - British stocks ended higher on Tuesday after drugmaker AstraZeneca denied reports that its COVID-19 vaccine was less effective in the elderly population, while Indivior surged after its former parent withdrew a $1.4 billion legal claim.
The blue-chip FTSE 100 index climbed 0.2%, with automakers and healthcare stocks leading the gains, while the mid-cap index rose 0.5%.
However, weakness in general retailers limited gains after British retail sales suffered their biggest annual drop since May this month, suggesting the latest lockdown is taking a heavy toll on many shops.
The mood was also dampened by a jump in Britain's unemployment rate to 5.0%, its highest in nearly five years, in the three months to November.
"Even though the unemployment rate is at 5%, it was meant to go to 5.1%. So, there were positive angles to pick among the negative news and I think that seems to have benefited sentiment alongside the pound falling," said Connor Campbell, a financial analyst at SpreadEx.
Drugmaker AstraZeneca gained 0.7% and gave the second biggest boost to the blue-chip index after it denied reports its COVID-19 vaccine was not very effective for people over 65.
The FTSE 100 has recorded consistent monthly gains since November on expectations of a vaccine-led recovery, but it has lost steam as extended lockdowns hit business activity.
The International Monetary Fund cut Britain's growth outlook for 2021 because of a resurgence in novel coronavirus cases, and forecast it would take until next year for the economy to regain its pre-pandemic strength.
Britain's Rolls-Royce dropped 1.8% after it downgraded expectations for how much its engines would fly this year.
Indivior leapt 13.1% to the top of the FTSE 250 index after it said late on Monday that former parent Reckitt Benckiser would withdraw a $1.4 billion claim against the company.
(Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu and Barbara Lewis)