UPDATE 1-London stocks gain on fresh stimulus; heavy-weight stocks support

Australian dollars in Sydney, Friday, Jan. 15, 2016. (AAP Image/Joel Carrett) NO ARCHIVING

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* UK Finance Minister announces 4.6 bln pound stimulus

* General retailers jump on record sales in December

* Fashion retailer Next gains on better-than-expected sales

* FTSE 100 gains 0.2%, FTSE 250 up 0.6% (Updates prices, adds comment)

Jan 5 (Reuters) – British shares gained on Tuesday, led by a jump in retail stocks following record grocery sales in December, while fresh stimulus measures overshadowed risks arising from a new national lockdown imposed to curb the spread of a new coronavirus variant.

Prime Minister Boris Johnson said on Monday the more contagious variant was spreading at great speed and immediate action was needed to slow it down.

The benchmark FTSE 100 index gained 0.2%, with general retailers and energy stocks gaining between 2% and 3%. BP and Royal Dutch Shell were the biggest boosts to the index.

Britain on Tuesday announced a new 4.6 billion pound ($6.2 billion) support package, under which retail, hospitality and leisure companies will be able to claim new one-off grants worth up to 9,000 pounds.

“Markets have developed the idea that after lockdowns comes a financial pump which the government has delivered providing a boost to risk assets,” said Keith Temperton, equity sales trader at Forte Securtities.

The blue-chip index currently trades at levels seen in early March last year when the coronavirus crisis had begun to roil markets globally, but has gained nearly 33% from its record 2020 lows as the economy showed signs of improvement led by huge government stimulus packages.

December was the busiest month ever for British supermarkets as tightening COVID-19 curbs and the closure of restaurants, bars and cafés meant shoppers spent 11.7 billion pounds ($15.9 billion) on groceries, industry data showed.

The mid-cap index was up 0.6%.

Morrisons, Britain’s fourth-largest supermarket group, reversed early gains to fall 0.2% even after reporting a rise in underlying sales in its latest trading period encompassing Christmas.

British fashion retailer Next jumped 8.2% after it said its Christmas sales were much better than it had expected.

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