By Muvija M
(Reuters) - British bluechips handed back gains as falls in oil majors offset relief over the absence of an immediate escalation in Middle East tension, but a report that Britain's preparations for a no-deal Brexit had been halted aided domestic stocks.
The FTSE 100 <.FTSE> ended flat on the day with Shell <RDSa.L> and BP <BP.L> losing roughly 1% each due to lower oil prices, while the midcaps <.FTMC> outperformed with a 0.3% gain.
The FTSE 250 index of domestically exposed stocks has fared better in comparison to its bluechip counterpart since Prime Minister Boris Johnson won a clear majority in the December election.
His victory meant the Brexit process would be smoother, as earlier transition deals by Johnson and his predecessor, Theresa May, failed to win over a parliament that was deadlocked over how, when or even if to leave the European Union.
Sky News reported that Britain's emergency preparations for a no-deal Brexit have been halted "with immediate effect" as Johnson's deal to leave the EU is expected to be approved by lawmakers later this week.
That lifted shares of housebuilders <.FTNMX3720>, considered among the most vulnerable to a disastrous departure from the trading bloc.
Global markets steadied after the killing of a top Iranian military commander by the United States sparked a selloff on Monday, when both the UK benchmark indexes lost nearly 1%.
Among midcaps, Premier Oil <PMO.L> shares surged 14% after a deal to buy certain BP <BP.L> assets, more than offsetting an 17% slide in luxury carmarker Aston Martin <AML.L> following a profit warning.
Aston Martin, James Bond's brand of choice, has seen its shares plummet about three quarters in value since a 2018 listing.
Retailers were the standout performers among bluechips, as robust sales by Morrisons <MRW.L> helped strike out some worries of dismal trading updates for the key holiday period.
"First out (of) the gate among the big four listed grocers and Morrisons passes the test – trading was tough and for sure they are leaking market share to the discounters, whilst the election in December certainly had an impact," Markets.com analyst Neil Wilson wrote.
Ocado <OCDO.L>, Morrisons, Kingfisher <KGF.L>, Primark owner Associated British Foods <ABF.L> and Sainsbury's <SBRY.L> took the top spots on the main index with gains between 1.6% and 4.2%
Investors had shunned the sector in the last session when Bank of America said retailers faced structural challenges, including market share losses to discounters such as Aldi UK and profit dilution due to e-commerce.
(Graphic: Morrison, https://fingfx.thomsonreuters.com/gfx/buzzifr/15/4111/4111/Pasted%20Image.jpg)
(Reporting by Muvija M and Yadarisa Shabong in Bengaluru; Editing by Arun Koyyur)