REFILE-UPDATE 1-FTSE cheers easing U.S.-Iran worries; midcaps miss out

(Refiles to fix typo in company name in paragraph 6)

* FTSE 100 up 0.4%, FTSE 250 down 0.1%

* Tesco tops blue-chip index

* SIG tanks after profit warning, M&S whacked

* Galliford outshines midcaps

By Shashwat Awasthi

Jan 9 (Reuters) - London's main index advanced on Thursday
as chances of a full-blown crisis in the Middle East waned, but
the midcaps lagged as SIG and Marks and Spencer fell after
warning of lower annual results and dragged their peers lower.

The FTSE 100 rose 0.4% and was set for its best day
in a week after U.S. President Donald Trump stepped back from
more military action against Iran and Tehran signalled an end to
retaliation.

"It looks like the shooting war is over for now, but there
is always the potential for escalation at any point,"
Markets.com analyst Neil Wilson said.

"But the relative calm should mean the focus will come back
to the economic data and U.S.-China trade deal."

The FTSE 250 handed back initial gains and fell 0.1%
as building materials supplier SIG slumped 24%, pinning
its weak outlook on longer-than-expected recovery in UK and
Germany construction markets.

Its shares were tracking their worst day ever and also led
those of peer Travis Perkins down 4%.

Retailer M&S slid 8% and was on course for its
biggest one-day fall in over seven months after warning on
margins. Blue-chip rival Kigfisher dropped
2.7%.

"This raises questions about whether (M&S) management's
profit guidance is credible. The market believes there could be
another warning if margins are being creamed," Markets.com
analyst Neil Wilson said.

The retail gloom also engulfed greeting card specialist Card
Factory, which tumbled 19% to a life low, after saying
subdued performance over Christmas would hit profit.

Industry data earlier this week showed Britain's
supermarkets recorded the lowest sales growth over the Christmas
trading period for five years and that was vindicated by the
trading updates from Tesco and John Lewis.

However, Tesco shares advanced 2.6% to top the main board as
near-flat Christmas sales were still better than what its rivals
reported. Bernstein analysts said performance was very strong
given a subdued market and pressure from discounters.

Galliford outperformed midcaps with a 5% rise,
saying new construction contract wins after the sale of its
residential business to Vistry Group, formerly Bovis
Homes, had aided first-half performance.

Recruiter Robert Walters skidded 10% and was on
track for its worst day since June 2016 after profit fell as
employer and candidate confidence in the UK dwindled due to
uncertainty around Brexit and last year's general election.

(Reporting by Shashwat Awasthi in Bengaluru;
Editing by Arun Koyyur)