UPDATE 2-UK shares end shortened week on upbeat note

(Updates with closing prices. The London market is closed on
Friday for a public holiday. Reuters will continue coverage on
Monday, May 11)

* FTSE 100 up 1.4%, FTSE 250 adds 1.7%

* China exports rise for the first time this year

* Lenders gain after upbeat BoE stress test

* Insurer RSA jumps on minimal coronavirus hit
(Updates with market closing)

By Devik Jain and Sagarika Jaisinghani

May 7 (Reuters) - Britain's stock markets ended a shortened
week on a positive note on Thursday as a surprise rise in
Chinese exports fed into hopes for a swift recovery from a
coronavirus-led recession.

With UK markets closed on Friday for a public holiday, the
blue-chip FTSE 100 rose 1.4% by the close to wrap up a
second consecutive week of gains.

The domestically oriented mid-cap index rose 1.7%.

Banks, miners, oil and gas companies were among the top
performer as investors took cheer from the Chinese data showing
that exports rose unexpectedly in April as factories raced to
make up for lost sales.

That helped markets look past the Bank of England's dire
projection that the British economy could shrink by 14% this
year because of the coronavirus outbreak. That would be its
biggest plunge since a 'Great Frost' in 1709.

The central bank, which refrained from any big moves on
Thursday, kept the door open for more stimulus next month.

"There's a lot of momentum behind equity markets these
days," said Stefan Koopman, senior market economist at Rabobank.

"But the bottom line is, it is going to hurt badly in the
next couple of quarters and there has to be a point where
markets will start to price in a little bit more realistically."

Prime Minister Boris Johnson will announce a very limited
easing of the country's lockdown next week, a spokesman said,
amid criticism for moving too slowly to tackle an outbreak that
has led to more than 30,000 deaths in Britain.

In company news, Britain's biggest telecoms group BT
tumbled 8.1% after it suspended its dividend and pulled guidance
for 2020, citing the pandemic.

Its shares also took a hit as U.S. firm Liberty Global
and Spain's Telefonica agreed to merge their
British businesses in a $38 billion deal to challenge market
leader BT.

HSBC, Barclays, Lloyds Banking Group
and Royal Bank of Scotland gained between 2.7%
and 5.4% after a Bank of England "desk-top" stress test showed
that leading banks are sufficiently robust to keep lending
despite the economic fallout from the pandemic.

Insurer RSA jumped 6.6% after it estimated its
exposure to the outbreak at only 25 million pounds ($31 million)
and said that most of its business-interruption policies did not
provide cover for coronavirus-related claims.

Rival Phoenix Group gained 6.3% after confirming it
would pay a dividend for 2019.
(Reporting by Sagarika Jaisinghani, Devik Jain and Sruthi
Shankar in Bengaluru; Editing by Bernard Orr and David Goodman)