UPDATE 2-British equities cheer signs Brexit deal possibly at hand

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* EU prepares path for implementation by Jan. 1
* More of England to go into top tier restrictions
* Cairn Energy soars on tax dispute win
* FTSE 100 up 0.66%, FTSE 250 adds 1.74%

(Updates to market open)
By Medha Singh
Dec 23 (Reuters) - UK mid-caps ended at a 10 month high on
Wednesday as signs of a possible pre-Christmas Brexit trade deal
to avoid a messy exit from the European Union at the year end
offset worries over widening restrictions to curb the spread of
COVID-19.
The domestically focused FTSE 250 .FTMC , considered a
proxy to Brexit sentiment, ended at session high, up 1.7% after
a senior European diplomat told Reuters that a UK-EU agreement
was in "final stages". The exporters-heavy FTSE 100 .FTSE also added 0.7%,
although a jump in the pound kept the dollar earners' gains in
check. GBP/
There was no official confirmation from either side that a
deal was about to be struck. However, three diplomatic sources
in the bloc told Reuters that member states had started to
prepare their procedure to implement a deal from Jan. 1, if one
was agreed.
"There has been overall some strong optimism that this
Brexit drama will finally deliver a trade deal that will allow
the focus to come back to the economy," said Edward Moya, senior
market analyst at OANDA.
The FTSE 100 is set to close the holiday-shortened week
lower as fears about the new fast-spreading variant of the
coronavirus in Britain prompted wide travel bans and stricter
restrictions. Large regions across southern England would join London and
neighbouring areas to be placed into restrictions similar to
that of a lockdown from Dec. 26, further clouding UK's economic
outlook. In company news, British pub operator Marston's MARS.L
shares jumped 8% after the company said it will operate Brains'
156 pubs in Wales in a deal that will save 1,300 jobs.
Cairn Energy CNE.L surged 23%, topping gains on the FTSE
250, after winning an international arbitration case against the
Indian government over a tax dispute.