UPDATE 2-British mid-caps recover sharply as Brexit deal hopes revive

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* Job redundancies hit record high

* Chemring hits eight-year high after 2020 results

* FTSE 100 down 0.3%, FTSE 250 up 0.5%
(Updates to market close)

By Medha Singh

Dec 15 (Reuters) - British mid-cap stocks gained ground on
Tuesday in the final hour of trading as renewed hopes of a
Brexit trade agreement overshadowed concerns over a weak labour
market report and concerns over new restrictions in London.

The domestically focussed FTSE 250 index recouped
early losses to end about 0.5% higher as a BBC journalist
tweeted Britain and the European Union are heading towards a
trade deal that will satisfy Brexit supporters.

A sharp rise in the sterling helped the blue-chip FTSE 100
index pare its losses to about 0.3% with consumer
staples weighing the most.

The FTSE 100 has lost 13.6% in value so far this year, which
is shaping up to be its worst since the global financial crisis
in 2008-09, as pandemic-driven lockdowns battered the economy
and led to mass layoffs.

"Equity prices will appreciate further from today's levels
through 2021, although not by as much as earnings advance,
bringing price-to-earnings ratios down modestly," said
Frédérique Carrier, head of investment strategy at RBC Wealth
Management.

The UK's economy is most likely to regain its pre-pandemic
highground only in 2022, Carrier added.

An official report on Tuesday showed Britain's jobless rate
rose again in the three months to October and redundancies
reached a record high.

The job market outlook darkened further as tougher curbs
were imposed in London due to increased infection rates that may
be partly linked to a new variant of the coronavirus.

Among individual moves, Chemring jumped to an
eight-year high after the defence contractor said its 2020
results were ahead of its expectations.

JD Sports, Britain's biggest sportswear retailer,
bought retailer Shoe Palace for $325 million in a move that
would expand its footprint on the U.S. West Coast. However, its
shares ended 0.9% lower after more than doubling in value this
year.
(Reporting by Shivani Kumaresan in Bengaluru; editing by
Uttaresh. V, Subhranshu Sahu and Tom Brown)