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* FTSE 100 up 1.1%, FTSE 250 up 1.5%

* Energy stocks lag as oil prices fall

* UK economy shrinks 0.1% in April

By Tharuniyaa Lakshmi

June 12 (Reuters) - Britain's shares edged higher on Friday

after U.S. President Donald Trump said a peace agreement with

Iran could be signed soon, while investors also assessed key

economic data.

The blue-chip FTSE 100 index rose 1.1% to 10,414.02

points by 1059 GMT, while the midcap FTSE 250 climbed

1.5%. Both indexes were on track for weekly gains.

* The deal, if confirmed, could end the three-month-old war,

which sent oil prices sharply higher after Iran blockaded the

Strait of Hormuz, a vital artery for global energy supply.

* Most sub-indexes were in the green, except energy

, which fell 3.6% after oil prices slipped more

than 4% following the news.

* Homebuilders led gains; Vistry Group

was up 6.6%, and Bellway ( BLWYF ) and Persimmon

4% each.

* The travel and leisure sub-index, which

includes oil price-sensitive airlines, also advanced 3.6%.

British Airways owner IAG and budget carrier Wizz Air

Holdings ( WZZAF ) were among the top gainers.

* On the data front, Britain's economy contracted 0.1% in

April, its first monthly drop since August 2025, the Office for

National Statistics (ONS) said.

* ONS data showed the first clear signs of an impact from

the U.S.-Israeli war on Iran on the country's economic growth.

* "April's data hints at what is to come, a summer of

sluggishness which could edge into a technical recession as

global conflict collides with domestic political uncertainty,"

said Danni Hewson, head of financial analysis at AJ Bell.

* Separately, the British public's expectations for

inflation in the long term rose to a record high last month, the

Bank of England's quarterly inflation attitudes survey showed on

Friday.