UPDATE 2-Prospect of easing trade tensions, weaker pound lift FTSE 100

* FTSE 100 up 0.8%; FTSE 250 roughly flat
* Improving trade sentiment buoys markets
* Compass Group , Kingfisher among biggest blue-chip movers
* Metro Bank rises as funding details awaited

(Adds news items, analyst comment, updates to closing prices)
By Shashwat Awasthi and Muvija M
May 15 (Reuters) - Hopes that the United States' trade
tensions with China and Europe will dissipate, combined with a
weaker pound, lifted Britain's main index higher on Wednesday,
as a slew of earnings reports also drove share moves.
The FTSE 100 .FTSE advanced 0.8% and outperformed its
European peers. The FTSE 250 .FTMC was roughly flat.
Markets were initially upbeat after U.S. President Donald
Trump said talks between Beijing and Washington had not
collapsed, terming the Sino-U.S. conflict as "a little
squabble".
Trump administration officials later said the President was
expected to delay a decision on imposing tariffs on imported
cars and parts by up to six months, further bolstering investor
sentiment. "This may be a case of delaying the inevitable, but given
that the U.S. is already at odds with China and Iran, the
reasoning appears to be not to be fighting too many battles at
once," CMC Markets analyst Michael Hewson said.
Asia-focused HSBC HSBA.L provided the biggest boost to the
main index, while exporter stocks also supported it, benefiting
from a drop in sterling as Brexit jitters resurfaced.
Sterling fell to a three-month low, with Prime Minister
Theresa May expected to once again fail in getting her
thrice-rejected Brexit deal approved. GBP/ On an earnings-heavy day, Compass Group CPG.L was among
the top blue-chip gainers. The world's biggest catering company
rose 2.9% after raising its forecast for annual organic revenue
growth. But home improvement retailer Kingfisher KGF.L declined
3.6% after lower first-quarter sales in France, its
second-biggest market. SSE SSE.L and National Grid NG.L fell 2.5% and 0.9%
respectively. Britain's opposition Labour Party published plans
to re-nationalise the country's energy networks, prompting
utilities to warn of damage to investment, high taxpayer costs
and a slower transition to green energy. On the mid-cap index, Metro Bank MTRO.L , which has seen
volatile trading in recent months after disclosing an accounting
error, gained 15% with details of fresh funding from new and
existing investors awaited.
Provident Financial PFG.L skidded 6.5%. The company has
been subject to a hostile takeover by smaller rival Non-Standard
Finance NSF.L , which said after markets shut that it would go
ahead with its 1.3 billion pound takeover for the larger
subprime lender.