* FTSE 100 up 1.1 pct; FTSE 250 up 1.9 pct
* Market sees PM May defeating leadership challenge
* Brexit-sensitive housebuilders rise
* Trump's conciliatory trade talk boosts markets
* Superdry sinks 38 pct on profit warning (Updates prices, adds details, graphic)By Josephine Mason and Helen ReidLONDON, Dec 12 (Reuters) - British stocks rose on Wednesdayas investors welcomed conciliatory talk from U.S. PresidentTrump on trade and became more convinced Prime Minister TheresaMay would see off a leadership challenge and win a no-confidencevote.The FTSE 100 ended the day up 1.1 percent asfinancials and materials stocks rallied.Heavyweight lender HSBC , which makes a big chunk ofits revenue in China, was the biggest contributor to gainsfollowed by BHP and Glencore, boosted by higher metals prices.The more domestically-focused midcap index climbed1.9 percent after May said she would fight the no-confidencevote and a growing majority of Conservative lawmakers indicatedsupport for her ahead of the vote between 1800 and 2000 GMT. "I don't think we can bet on who will win," said EmmanuelCau, head of European equity strategy at Barclays.
"I think it's about the market's interpretation of thecapacity of the person in charge to get a deal, and about thetiming left to get a deal done."Sterling surged up 1.3 percent, suggesting traders reckonshe will win the vote which could quash hard Brexiteers forgood. The rise in sterling and FTSE 100 together indicated thatan inverse relationship between the two was weakening.Ireland's main stock index , which has fallen 22percent so far this year, was the only major European bourse inthe red by mid-morning, but recovered to close up 0.6 percent.Ireland's economy is seen as very vulnerable to any hardBrexit outcome.FTSE investors focused instead on positive signs from theprotracted U.S.-China trade war.In an interview with Reuters, Trump said talks were takingplace with Beijing by phone and he would not raise tariffs onChinese imports until he knew whether the two sides would reacha deal. "The global issues are dominating local issues (today). Thepositive comments from Trump on Huawei, better U.S.-China tradesituation are dwarfing the local issues," said Andrew Milligan,head of global strategy at Aberdeen Standard Investments.
Trump said he would intervene in the Justice Department'scase against a top executive at China's Huawei Technologies if it would serve national security interests or helpclose a trade deal with China.Mining stocks BHP Group , Glencore , and RioTinto climbed as base metals rallied following Trump'scomments. Among fallers, Wood Group lost 10.2 percent to itslowest since May. Its cautious outlook on contracts, asoil-producing clients struggle with volatile prices, outweighedan upbeat earnings outlook. Sainsbury's shares also tumbled 7.2 percent afterthe Competition and Markets Authority refused to give the grouplonger to respond to the latest evidence in an inquiry into its7.3 billion pound deal to merge with Asda. Housebuilder shares recovered from early losses as themarket became more confident May would see off the challenge.The Brexit-sensitive stocks were among top gainers by theclose, with Persimmon , Taylor Wimpey , BerkeleyGroup and Barratt Development up 3.6 to 5.7percent.
Mid-cap housebuilders Bellway , Galliford Try , and Crest Nicholson climbed 4.5 to 6.8percent.High-street retailer Next was down 1.1 percent toits lowest since January, as disappointing news from clothesretailer Superdry and phone and electronics chainDixons Carphone further dented confidence in the batteredretail sector. Superdry plunged 38 percent after its third profit warningin a year, blaming unusually warm weather hitting sales ofwinter jackets and sweaters. "Shares have been caught up in the middle of a strategydisagreement," Stifel analysts said in a note. "Valuation willsuffer from short term volatility and the time it will take toturn around the business."Dixons shares fell 6 percent, while Metro Bank lost5.7 percent after a Citi downgrade.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ftse sterling correlations Dec 12 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Josephine Mason and Helen ReidEditing by Mark Heinrich)
Messaging: josephine.mason.reuters.com@reuters.net))