UPDATE 2-China-U.S. trade deal, Brexit hopes turbo charge UK stocks

* FTSE 100 up 2.3%, FTSE 250 up 1.9%

* Preliminary trade deal spurs buying

* Domestic stocks firm further

* BAT biggest blue-chip gainer

* Sports Direct jumps after H1 results
(Adds news items, graphic, updates to closing prices)

By Shashwat Awasthi

Dec 16 (Reuters) - British shares continued to power higher
on Monday as a preliminary U.S.-China trade deal and hopes of an
orderly Brexit after UK Prime Minister Boris Johnson's election
victory saw investors flock to perceived riskier assets, such as
equities.

The benchmark FTSE 100 soared 2.3%, its biggest
one-day percentage gain in nearly a year, while the midcap FTSE
250 surged 1.9% and hit a new all-time high. Both moves
followed hefty gains in the previous session.

Markets breathed a sigh of relief after U.S. Trade
Representative Robert Lighthizer said a 'phase-one' trade deal
with China was "totally done", boosting trade-exposed UK stocks
including HSBC, Burberry and miners.

Meanwhile, domestically focussed stocks continued to benefit
from the British election euphoria, with banking big shots
Lloyds, Barclays and RBS jumping
between 3.7% and 5.5%.

Victory for Johnson's Conservative Party has reassured
markets that Britain is likely headed for a swift exit from the
European Union, dispelling some uncertainty after 3-1/2 years of
political chaos.

"You are going to have a combination of both international
investors putting money into the UK market ... plus within the
UK you are going to have more commitment of capital to projects
and businesses than we've had previously," said Scott Thiel,
chief fixed income strategist at BlackRock Investment Institute.

Tobacco firm BAT was the biggest blue-chip gainer
after Bank of America Global Research handed the stock a rare
double upgrade.

Notable news-driven moves were limited to midcaps.

Mike Ashley's Sports Direct leapt 31%, its biggest
ever one-day gain, after the retailer, which will change its
name to Frasers Group, forecast core earnings growth of as much
as 15% this financial year .

Tullow Oil, which lost more than half its value last
week, dropped 10% after ratings agency S&P Global cut its
long-term credit rating and HSBC downgraded the stock.

Cineworld ended 2.5% higher. The cinema operator
had earlier shed nearly 9% after announcing a $2.1 billion
takeover of Canada's Cineplex to be financed by raising
more debt, which analysts said had made investors uneasy.

(Reporting by Shashwat Awasthi and Muvija M in Bengaluru,
Editing by Sherry Jacob-Phillips and Mark Potter)