LONDON: 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, 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 also added 0.7%, although a jump in the pound kept the dollar earners’ gains in check.

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. In company news, British pub operator Marston’s 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 surged 23%, topping gains on the FTSE 250, after winning an international arbitration case against the Indian government over a tax dispute.