By Sagarika Jaisinghani
(Reuters) - UK mid-caps rose to a two-month high on Tuesday as hopes of a stimulus-led rebound helped investors look past a mixed batch of quarterly earnings updates, while InterContinental Hotels jumped on signalling a tentative recovery.
The Holiday Inn owner (L:IHG) gained 3.4% after it said it was seeing some "very early" signs of returning demand as coronavirus-related restrictions eased in major markets.
The mid-cap FTSE 250 (FTMC) rose for a third straight session, as Bank of England Deputy Governor Dave Ramsden said the central bank would step up quantitative easing if the economy slowed again. June gross domestic product figures are due on Wednesday.
The blue-chip FTSE 100 (FTMC) added 1.6%, tracking gains in Asia and on Wall Street on relief that a U.S.-China spat appeared not to have spilled over into trade.
"The markets appear to have remained broadly immune to developments surrounding the U.S.-China saga," said Charalambos Pissouros, market analyst at JFD Group.
"(More stimulus) may add fuel to investor morale, pushing equities and other risk-linked assets further up and safe havens down."
Historic global stimulus and improving economic data have powered UK stock markets since a coronavirus-driven crash in March. Data on Tuesday showed British consumers spent the most in July since a coronavirus-led lockdown in March, as pubs, restaurants, barbers and beauty salons reopened.
Still, investors are cautious with unemployment remaining elevated and a resurgence in COVID-19 cases threatening another round of lockdowns, and the FTSE 100 has underperformed its European and U.S. peers.
Energy (FTNMX0530), life insurance (FTNMX8570) and travel-related (FTNMX5750) stocks were among the top gainers of the day, while homebuilders (FTNMX3720), utilities (FTNMX7570) and real estate (FTUB8600) firms lagged the wider market.
Housebuilder Bellway Plc (L:BWY) fell 1.1% as it constructed fewer homes in the year due to the lockdown, while Domino's Pizza Group Plc (L:DOM) slipped 2.6% on lower first-half operating earnings.