By Muvija M
(Reuters) - UK midcaps closed the session with modest gains on Monday on hopes that a no-deal Brexit will be avoided, even though uncertainties persisted as lawmakers forced Prime Minister Boris Johnson to seek another extension from the European Union.
The domestically focused FTSE 250 added 0.4% on Monday, while the exporter-heavy FTSE 100 edged 0.2% higher, lagging its European counterpart as the pound strengthened.
A 9% plunge in medical device maker Smith+Nephew after its CEO departed also capped gains.
In a parliamentary showdown on Saturday, lawmakers voted in favour of an amendment exposing an unwilling Johnson to having to ask the European Union for a delay to the Brexit deadline and withheld support for the last-minute divorce deal.
Along with the extension request, Johnson sent another letter to the EU laying out reasons why the exit should not be delayed, sending conflicting messages to the bloc.
Markets, however, looked past the political chaos to the fact that an extension to Brexit meant any near-term risk of a disruptive no-deal departure will be eliminated.
As a result, companies considered most vulnerable to any hit to the UK economy advanced. Banking group Lloyds, housebuilder Taylor Wimpey and Royal Bank of Scotland added between 2% and 2.2%.
The FTSE 250 has gained nearly 4% over the last two weeks, handily outperforming blue chips, as investors had bet that a long drawn out Brexit process could be nearing its end as Johnson chased a withdrawal agreement with the EU.
Elsewhere Prudential jumped 6% to top the FTSE 100 leaderboard as the M&G business demerger became effective. M&G fell slightly on its first day of trading.
Smith+Nephew suffered its biggest loss in over a decade after it said Chief Executive Officer Namal Nawana would step down after just 17 months in the role.
Another steep faller on the main index was Just Eat, which skidded 6% to a four-month low as investors focused on the takeaway group's comments about a structural shift in Britain over a sharp rise in third-quarter revenue.
Miners meanwhile were the second-biggest support to the FTSE 100, tracking a rise in copper prices as protests in major producer Chile fuelled concern about supplies and on signs of improvement in U.S.-China trade relations.
"A perceived easing of U.S.-China trade tensions and the risk of a no-deal Brexit has supported risk assets since early October," BlackRock analysts wrote in their weekly note.
"Yet we expect more twists and turns in coming months, and see geopolitical risks staying elevated in the longer term."
Among midcaps, Capital & Counties Properties leapt 8.3% after luxury property developer Nicholas Candy's investment arm said it was in early talks for a possible cash offer for the property manager.
Graphic: UK indexes: Of Brexit referendum & extensions - https://fingfx.thomsonreuters.com/gfx/mkt/12/7617/7548/Pasted%20Image.jpg
(Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Arun Koyyur and David Holmes)