UPDATE 2-UK blue chips hit 9-month high on Brexit trade deal cheer

(For a Reuters live blog on U.S., UK and European stock
markets, click LIVE/ or type LIVE/ in a news window)

* Brexit deal sparks rally in UK stocks

* FTSE 100 at highest since March

* Hut Group rises on online retailer acquisition

* FTSE 100 up 1.6%, FTSE 250 adds 1.7%
(Updates to market close)

By Shivani Kumaresan

Dec 29 (Reuters) - Britain's blue-chip FTSE 100 index ended
at its highest since March on Tuesday as investors returned from
a long weekend to cheer a post-Brexit trade deal that averted a
chaotic exit from the European Union.

In its first day of trading after the deal, the blue-chip
FTSE 100 index gained 1.6%, logging its best day since
Nov. 9.

International companies such as Unilever and Diageo
gave the biggest boost to the FTSE 100 despite a firmer
pound, while drugmakers AstraZeneca and GlaxoSmithKline
also added to the gains.

"The deal should see sentiment towards the FTSE indices
recover just as the dividend payout ratio improves, vaccines are
rolled out and overseas revenues accelerate. We lift UK equities
to Bullish," analysts at brokerage Jefferies wrote in a note.

The coming days will provide a first taste of the effects of
Brexit and regulators on both sides of the English Channel will
be on alert for market dislocations on Jan. 4, the first trading
day of the new year.

"The honest answer is we do not know what January 1st will
hold. In all likelihood, there will be delays and bedding-in
period as the new reality and processes are explored and
enacted," said Jeffrey Halley, senior market analyst at OANDA.

The deal would ensure traded goods that make up half of
annual EU-UK commerce remain free of tariffs beyond Dec. 31.

The domestically-focussed FTSE 250 index climbed
1.7% to its highest level since Feb. 25.

The UK stock market has tracked a global rally this year
following the coronavirus-led crash in March, but lagged
European and U.S. peers on fears of a long road to pre-pandemic
levels of economic growth.

On individual stocks, shares in Hut Group rose 8.9%
after the e-commerce company said it would buy U.S. online
retailer Dermstore from Target Corp for $350 million in
cash.

British insurer Admiral gained 3.4% after reports
of Zoopla Property Group buying its Penguin Portals and Preminen
businesses.
(Reporting by Shivani Kumaresan in Bengaluru; Editing by
Subhranshu Sahu, Aditya Soni and Emelia Sithole-Matarise)