By Shashwat Awasthi and Muvija M
(Reuters) - London's FTSE 100 eked out gains despite an 8% slide in catering firm Compass Group on growing hopes of a U.S.-China trade resolution, while gains in LSE after shareholder approval for its Refinitiv deal and a weaker sterling also provided support.
The blue-chip index (FTSE) added 0.1%, while a 16% surge in pet supplies retailer Pets at Home after upbeat profit forecast helped mid-cap stocks outperform and close up 0.8% at its highest level in nearly 15 months.
The FTSE 250 index was outperforming the UK blue-chips as well as the broader European benchmark (STOXX), even as the pound fell after polls showed the Conservative Party's lead was narrowing before the December election.
Traders are buying into domestically-focused shares as they still believe the Conservatives will win a majority next month, which could potentially put an end to Brexit delays, CMC Markets analyst David Madden said.
The recent gains have placed the midcap index on course for its best yearly performance since 2014.
On the main board, however, Compass (L:CPG) recorded its worst day in over a decade after the company said deteriorating business and consumer confidence hit performance in Europe.
Shares of London Stock Exchange (L:LSE) climbed 2.1% after its shareholders overwhelmingly backed its $27 billion takeover of data and analytics company Refinitiv.
Thomson Reuters (TO:TRI) (N:TRI), the parent company of Reuters News, holds a 45% stake in Refinitiv.
The blue-chip bourse still took home its third consecutive session of gains as hopes that the United States and China could yet sign a "phase one" trade deal gained traction after top negotiators from both countries held a phone call to try and hammer out some details.
OANDA analyst Craig Erlam said markets were clinging to every headline that emanates on the trade front, amid a lack of major day-to-day updates.
"The details of the call were lacking, but the language used was promising...as long as that remains the case, investors will be optimistic of a deal," Erlam said.
Small-cap De La Rue (L:DLAR), which last month hit its lowest level in over two decades following a profit warning, plummeted 24% after it raised going concern doubts and scrapped its dividend.
"De La Rue is teetering on the brink," Markets.com analyst Neil Wilson said. "Today's update is worrying for investors because it suggests there's more damage out there to be done to the shares."