UK's benchmark FTSE 100 inched higher and the domestically focussed mid-cap stocks bounced on Tuesday as renewed hopes of a Brexit trade deal outweighed fears over a highly infectious new coronavirus strain that has shut most of the country.

The blue-chip FTSE 100 rose 0.2% after closing at a three-week low on Monday, while the mid-cap FTSE 250, considered a barometer for Brexit sentiment, added 1%.

The battered pound got a respite after Bloomberg reported that the European Union is considering a new proposal on fishing rights from the United Kingdom as Prime Minister Boris Johnson tries to secure a last-minute trade deal.

"A deal is being made on fishing by compromising, so that's given a little bit of hope," said Keith Temperton, a sales trader at Forte Securities. "We are not exactly flying but the selling seems to have abated."

UK markets were hammered on Monday - with economically sensitive banking, energy and retail stocks bearing the brunt - as countries around the world shut their borders to Britain due to worries about the new strain.

France also closed its border to trucks from Britain, shutting off one of the most important trade arteries with mainland Europe. Reports the two sides would announce a deal to restart freight by Wednesday helped ease some of those worries.

Meanwhile, data showed Britain's recovery from the coronavirus-induced crash was quicker than expected in the third quarter, with the gross domestic product growing 16.0%.

Drugmaker AstraZeneca slipped 1.5% after its experimental asthma drug with Amgen failed to meet the main goal of reducing patients' dependence on steroids in a late-stage trial.

Irish gas station operator Applegreen rose 2.0% after agreeing to be acquired by a consortium led by B&J Holdings and Blackstone Infrastructure Partners in a deal that valued it at around $877.66 million.