British equities gain as Trump delays EU tariffs

(Reuters) -British stocks closed higher on Tuesday in broad-based gains as investors cheered U.S. President Donald Trump's delayed tariffs on European Union imports.

The benchmark FTSE 100 was up 0.7%. Earlier on the day, the index touched its highest level since May 5.

The mid-cap FTSE 250 gained 1.1%.

The market was closed on Monday for a bank holiday.

Trump said on Tuesday the EU's move to set up trade meetings was positive and he hoped Europe would "open up" to trade with the U.S.

After a weekend call with the European Commission's president, Trump paused until July 9 his threatened tariff of 50% on goods entering the U.S. from the 27-nation EU.

Meanwhile, the International Monetary Fund (IMF) nudged up its growth forecast for Britain this year to 1.2%, up from 1.1% predicted in April. It also advised finance minister Rachel Reeves to continue reducing public borrowing.

Despite challenges from U.S. tariffs, growth in UK is expected to rise to 1.4% by 2026.

Among stock-related moves, aerospace and defence stocks gained 2.6% after Trump threatened additional sanctions on Russia.

BAE Systems boosted the FTSE 100 with a 3.1% rise.

Luxury brand Burberry gained 5.3%, after Barclays upgraded the stock to "equal-weight" from "underweight". Personal goods led the sectoral gains with a 5% rise.

Specialty chemicals firm Elementis rose 11.4% after agreeing to sell its talc business to IMI Fabi in a deal worth $121 million in enterprise value.

Jupiter Fund Management jumped nearly 10% after Peel Hunt upgraded the money manager's stock to 'add' from 'hold'.

Precious metal miners fell 1.8% tracking lower gold prices. [GOL/]

Investor focus will be on speeches from Federal Reserve policymakers and Friday's U.S. core PCE data, which could provide clues on the rate outlook for the world's biggest economy.

(Reporting by Twesha Dikshit, Ragini Mathur and Sanchayaita Roy; Editing by Savio D'Souza and David Evans)