* FTSE 100 up 0.6%, FTSE 250 dips 0.3%
* Hopes for U.S.-China deal help blue-chips
* Mid-cap SIG plummets after profit warning
(Adds company news items, updates share moves)
By Muvija M and Shashwat Awasthi
Oct 7 (Reuters) - Oil majors led a rebound in London's FTSE
100 on Monday as investors hoped for a U.S.-China trade deal,
while a sell-off in the construction sector after a profit
warning from SIG and scepticism over the chances of a Brexit
deal knocked midcaps.
The main index, which had suffered its worst week in
nearly a year in the face of global trade tensions and the risk
of a recession, shrugged off early losses to close 0.6% higher.
Shell and BP climbed about 1% on a surge in
crude prices.
Broader gains were fuelled by hopes of an end to the
stand-off between the world's largest economies, with U.S.
President Donald Trump saying his administration had a "very
good chance" of making a trade deal with China.
Washington is set to host Chinese officials later in the
week to further trade talks.
The FTSE 250 missed out, however, ending 0.3% lower.
Losses were led by a 16% plunge in building materials supplier
SIG after it said weaker construction activity in the UK
would hit annual profit in its core units.
SIG's peers Travis Perkins and Howden Joinery
lost 2.1% and 3.1%, respectively, making industrials
the biggest sector drag on the midcap index.
A dip in the pound, due to fears that sizeable differences
remain between Britain and the European Union over a potential
Brexit deal, also weighed on domestic stocks.
Companies which earn a chunk of their earnings in the
greenback, including spirits company Diageo and
GlaxoSmithKline, edged higher as a fall in sterling
means the value of their earnings go up.
Despite yield curves remaining inverted on UK bonds for the
second straight day and the FTSE 100 trading below its 200-day
moving average - a key technical support -, market participants
pinned their hopes on this week's Sino-U.S. trade talks.
"If the world economy does start to slow down, that's a much
bigger impetus for China and the U.S. to get a trade deal done,"
Randeep Somel from M&G Investments' global equities team said.
British Airways owner IAG added 3.1% after saying
it carried more passengers last month compared to the
year-earlier period.
Troubled lender Metro Bank, which was recently
demoted from the midcap index, jumped as much as 10% after a
report that its founder Vernon Hill was working to take the
company private. The stock, which has plummeted nearly 90% this
year, closed up 2.2%.
(Reporting by Shashwat Awasthi, Muvija M and Indranil Sarkar in
Bengaluru; Editing by Bernard Orr and Mark Potter)
