FTSE 100 up on China stimulus hopes, mid-caps slip ahead of Brexit vote

Britain's FTSE 100 edged up on Tuesday on hopes Beijing will take steps to stabilise a slowing economy, but mid-caps slipped as investors remained cautious ahead of a crunch vote on British Prime Minister Theresa May's Brexit plan.

The FTSE 100 was up 0.1 percent at 1035 GMT while the domestically-focused FTSE 250 gave up initial gains and was down 0.1 percent, underperforming their European peers.

Sterling was about flat against the dollar in choppy trade ahead of the vote but remained close to a 2-month high of $1.2930 it hit on Monday.

British lawmakers appeared set to reject May's plan, and a heavy defeat could force her to delay Britain's scheduled departure from the European Union on March 29. It could also open up other options ranging from a second referendum to leaving the EU with no deal.

"Of course, we could get a situation where the vote gets passed, but given the polling numbers that looks about as likely as finding a unicorn," said CMC Markets analyst Michael Hewson.

In a last-ditch effort, May urged lawmakers on Monday to take a second look at her deal and warned parliament it risked the break-up of the United Kingdom if it voted against the agreement.

Raymond James analyst Chris Bailey said "the market is still a slave to Brexit newsflow and clearly multiple future scenarios exist, albeit that a 'soft' or delayed Brexit has become much more likely than the more apocalyptic 'no-deal' scenario."

Miners and consumer stocks supported the main index after China signalled more growth-boosting steps.

British American Tobacco and Diageo were the biggest boosts to the FTSE 100.

Homebuilders, among the most exposed to Brexit uncertainty, fell for the second consecutive session and cast a shadow over a bright update from Britain's second-biggest housebuilder Persimmon.

Gambling firms fell after the U.S. Department of Justice hinted at wider restrictions on all gambling on the internet. 888 Holdings tumbled 7.5 percent and GVC was the worst performer on the main index.

Earnings drove direction among the top midcap movers.

After profit warnings, sub-prime lender Provident Financial  plunged 20 percent, on track for its worst day since August 2017, and Spire Healthcare dropped 12.3 percent.

Online fashion retailer Boohoo shed nearly 6 percent despite raising its full-year sales forecast after a strong Christmas period.

But Spirent Communications surged 10 percent after forecasting better-than-expected full-year profits. Liberum analysts later said they "remain strong buyers of Spirent".

Flybe sank 40 percent on the small-cap index. Britain's biggest domestic airline agreed to sell some assets and got a revised bridge loan in relation to a takeover offer by a consortium.