By Muvija M and Yadarisa Shabong
(Reuters) - London's main stock index recorded its best one-day gain in more than four months on Tuesday as a promise of more stimulus if required from European Central Bank (ECB) chief Mario Draghi lifted UK shares across sectors.
The FTSE 100 index ended 1.2% higher, after having earlier touched levels not seen in two months, and the FTSE 250 midcap index added 0.8% after Draghi said the central bank would need to ease policy again if inflation did not head back to its target.
The ECB's comments came in the midst of a two-day meeting of the U.S. Federal Reserve that money market pricing shows should clear the way to a cut in interest rates by the central bank next month.
"Market participants are more confident about the Fed as its two-day meeting starts, particularly as the ECB is sounding more dovish," Markets.com analyst Neil Wilson said.
"The appetizer from Draghi has whet markets' appetite for a feast. They may be left hungry."
After falling for the first month this year in May and with Tuesday's gains, the FTSE 100 is on course for its biggest rise in 14 months on growing hopes of more official moves to help growth after a period of turbulence over U.S.-China trade tensions.
Tool hire firm Ashtead (LON:AHT) was the biggest blue-chip gainer after its 2019 revenue surpassed analysts' expectations. The stock jumped 6.1% on its best day in over 2-1/2 years.
Tesco (LON:TSCO), Britain's biggest retailer, rose 3.7% after it said it was targeting further margin improvements beyond the end of its current recovery plan.
Drugmaker AstraZeneca was the biggest boost after its cancer medicine Lynparza was approved as a first-line maintenance treatment for a type of advanced ovarian cancer by the European Commission.
Oil majors and miners also played their part in bolstering the index after the U.S. said it would hold an extensive meeting with China at the G20 summit later this month. [O/R]
An index of mining stocks climbed 2.5%, its best in nearly five months, as a key mine in Chile halved output due to a strike, pushing copper prices higher.
FTSE 250 component and contractor Kier Group (LON:KIE) surged 11% after steep falls in the previous session when it announced plans to sell businesses, suspended its dividend and said it would cut hundreds of jobs.
Capital & Counties Properties advanced 5% to be among top mid-cap risers after media reports that Canary Wharf Group was in preliminary talks to buy most of its stake in Earls Court, in which Capco has a holding.