(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)
* Brexit deal sparks rally in UK stocks
* FTSE 100 at highest since March
* Hut Group rises on online retailer acquisition
* FTSE 100 up 1.6%, FTSE 250 adds 1.7% (Updates to market close)
By Shivani Kumaresan
Dec 29 (Reuters) - Britain's blue-chip FTSE 100 index ended at its highest since March on Tuesday as investors returned from a long weekend to cheer a post-Brexit trade deal that averted a chaotic exit from the European Union.
In its first day of trading after the deal, the blue-chip FTSE 100 index .FTSE gained 1.6%, logging its best day since Nov. 9. companies such as Unilever ULVR.L and Diageo DGE.L gave the biggest boost to the FTSE 100 despite a firmer pound, while drugmakers AstraZeneca AZN.L and GlaxoSmithKline GSK.L also added to the gains.
"The deal should see sentiment towards the FTSE indices recover just as the dividend payout ratio improves, vaccines are rolled out and overseas revenues accelerate. We lift UK equities to Bullish," analysts at brokerage Jefferies wrote in a note.
The coming days will provide a first taste of the effects of Brexit and regulators on both sides of the English Channel will be on alert for market dislocations on Jan. 4, the first trading day of the new year. honest answer is we do not know what January 1st will hold. In all likelihood, there will be delays and bedding-in period as the new reality and processes are explored and enacted," said Jeffrey Halley, senior market analyst at OANDA.
The deal would ensure traded goods that make up half of annual EU-UK commerce remain free of tariffs beyond Dec. 31.
The domestically-focussed FTSE 250 index .FTMC climbed 1.7% to its highest level since Feb. 25.
The UK stock market has tracked a global rally this year following the coronavirus-led crash in March, but lagged European and U.S. peers on fears of a long road to pre-pandemic levels of economic growth.
British insurer Admiral ADML.L gained 3.4% after reports of Zoopla Property Group buying its Penguin Portals and Preminen businesses.
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