Britain's FTSE boosted by banks and insurers

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* FTSE 100 up 0.5 pct

* FTSE 250 hits all-time high, up 0.1 pct

* Banks, insurers lead gains after Yellen comments

* TUI doubles back on previous day's gains

By Helen Reid

LONDON, Feb 15 (Reuters) - Britain's major share indexgained on Wednesday, as investors bet on banking stocks afterFederal Reserve Chief Janet Yellen's hawkish tone on Tuesdaysuggested U.S. interest rates would rise.

RBS, Standard Chartered, Barclaysand Lloyds were among top gainers, up 1.5 to 2.2percent, buoyed by Yellen saying the Fed would likely need toraise interest rates at its next meeting.

The FTSE 350 banking index was the top sectoralgainer, up 1.5 percent.

Higher interest rates translate into higher margins forbanks, which have been under pressure from a "lower for longer"interest-rate environment.

"In focus today will likely be the second day of Fed ChairJanet Yellen’s testimony, day one having been digested ashawkish, sending the dollar to levels last seen on Jan. 20,"said Michael van Dulken from Accendo Markets.

"While the euro has since sold off, note sterling remainsrather resilient holding the FTSE back from bettering Monday’shighs."

Construction company Ashtead was the top gainer, up2.5 percent, and insurers Prudential and Legal & General also gained along with miners BHP Billiton andAnglo American.

Tour operator TUI was the biggest loser on theindex, down 5.7 percent after its results prompted exuberance onTuesday. The stock erased its gains in the previous session.

The mid-cap index hit an all-time high of 18,847.76points at the open, maintaining momentum from Tuesday's session,and was last up 0.1 percent. Acacia Mining was amongtop gainers, up 4.2 percent after Credit Suisse raised itsrating on the stock to "outperform".

Gambling companies Ladbrokes and William Hill were under pressure, however, down 3.7 and 2.5 percentafter HSBC cut its ratings on both stocks to "reduce" from"hold".

NEX Group, a brokerage which reported higherearnings on volatile markets after Donald Trump's election asU.S. president, was also down 3.8 percent. (Reporting by Helen Reid, additional reporting by Kit Rees;Editing by Janet Lawrence)