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Banks, miners boost UK stocks as recovery optimism back in focus

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By Shivani Kumaresan

(Reuters) -British shares rose on Tuesday, boosted by gains in banks and miners on investor optimism over a vaccine-led economic recovery, while Royal Mail climbed after announcing a one-off dividend payment.

The blue-chip FTSE 100 index was up 0.7%, with bank and mining stocks including HSBC Holdings, Barclays, Prudential Financial, Rio Tinto, Anglo American and BHP being the biggest gainers.

Oil heavyweights BP and Royal Dutch Shell were also among the biggest boosts, rising between 0.5% and 1%.

“There seems to be not much concern now about the Archegos share dump, which is on hold for now. There could be something lurking, but it seems to be concentrated to may be just a couple of the banks,” said Neil Wilson, chief market analyst at Markets.com.

The FTSE 100 has rebounded more than 38% from a coronavirus-driven crash last year, but has struggled to reach pre-pandemic highs as commodity prices, lockdown measures and rising U.S. bond yields weigh.

Bank of England rate-setter Gertjan Vlieghe said Britain’s economy would still need help from the central bank to restore it to its pre-pandemic growth path, even with a fast recovery and some inflation this year.

The domestically focused mid-cap FTSE 250 index climbed 0.5%, led by industrials stocks.

Imperial Brands Plc fell 0.9%, even after maintaining its full-year adjusted profit growth forecast, as it expected “significantly reduced” losses from next generation products and increased investments in its business.

A.G. Barr, best known for Scottish fizzy drink Irn-Bru, fell 2.1%, after a 30.5% slump in full-year profit, as the coronavirus-led restrictions imposed last December weakened sales in pubs and sapped demand for its products.

Royal Mail added 1.8%, after saying it would pay a one-off dividend for the year ending March following recent upgrades to its financial outlook on the back of a surge in parcel demand during the pandemic and a recent pick-up in letter volumes.

(Reporting by Shivani Kumaresan in Bengaluru; Editing by Subhranshu Sahu and Shailesh Kuber)

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