FTSE 100 rises as pound hit by Brexit deal legal opinion

By Shashwat Awasthi and Muvija M

(Reuters) - Britain's FTSE 100 gained on Tuesday after a fall in the pound triggered by the government's lawyer saying last-minute assurances won by Prime Minister Theresa May for her Brexit deal left the risk over the so-called Irish backstop "unchanged".

The export-heavy main bourse and the more domestically-focused FTSE 250 were up 0.3 percent. Ireland's main index, seen as a gauge of Brexit jitters, rose 0.4 percent.

Domestic banks and housebuilders gained ground on relief Britain may avoid a disorderly exit from the European Union after May got "legally binding" Brexit assurances from Brussels.

Tuesday's rise in the main index was also aided by official data that showed Britain's economy picked up in January after a weak December but growth was still stuck in low gear ahead of Brexit.

The weakness in the pound following Attorney General Geoffrey Cox's comments spurred blue-chips further.

POUND POUNDED

"Rather predictably, the pound's early gains were constructed from eggshells and spittle, blown away by the slightest shift in the day's Brexit winds," Spreadex analyst Connor Campbell said.

Banks with a big domestic focus and housebuilders, considered to be vulnerable to economic hits stemming from Brexit, were among the best performers on the index.

Barclays added 1.2 percent, state-owned lender Royal Bank of Scotland was up 0.7 percent and homebuilders Persimmon and Taylor Wimpey added 1.9 percent and 2.2 percent respectively.

British lawmakers, who on Jan. 15 voted 432-202 against May's deal, were studying the assurances and Cox's legal advice before the vote later on Tuesday.

"I expect sterling to come under further pressure in the short term unless May is able to get her Brexit deal approved in parliament, something I now give a 10 percent chance," JCI Capital portfolio manager Alessandro Balsotti said.

Among a handful of blue-chip losers was gambling firm GVC, which fell after a rating downgrade and bearish comments on the sector from Barclays.

British Airways owner IAG and tour operator TUI's London-listed shares gave up nearly a percent each as part of a spillover from the suspension of Boeing's 737 MAX 8 jets.

Sirius Minerals added 8 percent on the mid-cap index after announcing an alternate financing proposal with lenders while wealth manager Quilter advanced 8.3 percent after better-than-expected results.

Administration and payment service provider Equiniti fell 8.3 percent after a delay in the separation of its U.S. business from Wells Fargo and lower 2018 pretax profit.

High street retailer Mothercare had its best day since early October after detailing plans to sell its educational toy brand Early Learning Centre as it seeks to cut debt. The stock gained 5.4 percent.

Big UK-focussed banks vs FTSE 100 since Brexit referendum - https://tmsnrt.rs/2UrUK9o

(Reporting by Shashwat Awasthi and Muvija M in Bengaluru, additional reporting by Danilo Masoni; editing by Alexander Smith and Ed Osmond)