UK stocks mixed but log strong weekly gains on ebbing inflation

UK retail sales up more than expected in June

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Hargreaves Lansdown up on Jefferies upgrade

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FTSE 100 up 0.2%, FTSE 250 off 0.6%

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Indexes mark best week since early Jan

July 21 (Reuters) - British stocks were mixed at the close on Friday but the main benchmarks clocked their best weekly performance in more than seven months as easing inflation offset concerns about aggressive interest rate hikes by the Bank of England.

The blue-chip FTSE 100 closed 0.2% higher, boosted by oil and gas giants. The index registered weekly gains of 3.1%.

The domestically focussed FTSE 250 index slipped 0.6% on Friday, but posted a weekly rise of 3.4%.

Softer-than-expected inflation data this week brought relief to UK equities and dented the pound as investors bet on a smaller interest rate hike by the BoE next month.

However, data on Friday showed British retail sales grew faster than expected in June despite continued high inflation, thanks to unusually hot weather and a rebound in food sales.

"Further increase in retail sales volumes in June suggests the recent resilience in economic activity hasn't yet faded," said Ashley Webb, UK economist at Capital Economics.

"But our view that interest rates will rise further, from 5.00% now to a peak of 5.50%, suggest that it's too soon to conclude that the rebound in retail sales will be sustained and that the economy will avoid a recession."

After this week's inflation data, investors see UK rates peaking at around 5.85%, down from expectations of around 6.5% earlier this month. The bank rate is currently 5%.

Rate-sensitive homebuilders rose 0.2% and marked their best week in more than three years.

Heavyweight energy stocks gained 0.9% helped by higher crude prices on expectations of tighter supplies and economic stimulus for China.

Hargreaves Lansdown gained 1.9% after Jefferies upgraded the investment platform's rating to "buy" from "underperform".

Polymetal International fell 7.2% as the gold and silver producer said its stock will stop trading on the London Stock Exchange after Aug. 1. (Reporting by Shashwat Chauhan in Bengaluru, Khushi Singh and Rupali Chaudhary; Editing by Rashmi Aich, Eileen Soreng and Mike Harrison)