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FTSE 100 up 0.5%, FTSE 250 UP 0.6%

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UK's bank shares jump after Supreme Court ruling on car

loan

claims

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BP UP on major oil and gas discovery in Brazil's Santos

basin

Aug 4 (Reuters) - Bank shares led British equities

higher on Monday, rebounding from a sharp selloff on Friday,

while investors looked ahead to the prospect of interest rate

cuts by the Bank of England later this week.

The blue-chip FTSE 100 rose 0.5% as of 0925 GMT,

after logging its biggest percentage drop in almost four months

on Friday.

The domestically focused midcap FTSE 250 gained

0.6%.

Shares in British banks surged 2.1% on Monday

after the UK's Supreme Court overturned a ruling on motor

finance commissions, easing fears of a redress scheme that some

analysts had warned could cost tens of billions of pounds.

Lloyds Banking Group ( LYG ) shares jumped 7.4%, on track

for its biggest daily gain in over nine years.

Close Brothers surged nearly 20%, while Barclays ( BCS )

rose 2.3%.

Aerospace and defence gained 2.2%.

Rolls-Royce and BAE Systems were among the

top gainers in the FTSE 100, up 2.7% and 1.8%, respectively.

BP rose 1.3% after the energy heavyweight said it has

made its largest oil and gas discovery in 25 years in Brazil's

Santos basin.

Conversely, Convatec Group ( CNVVF ) fell nearly 2% after the

British medical equipment maker said CEO Karim Bitar would take

a medical leave of absence.

Auction Technology Group's ( ATHGF ) plunged 19.6% and was the

top loser on the FTSE 250, after the online auction operator cut

its annual profit margin forecast.

On the radar this week, the Bank of England is widely

expected to cut its key interest rate to 4% from 4.25% on

Thursday and to lower it once more before the end of the year,

despite consumer price inflation rising to close to double the

central bank's 2% target in June.

Meanwhile, a sharp downward revision to past U.S. jobs data

on Friday, followed by President Donald Trump's decision to fire

the head of Labor Statistics added an extra layer of nervousness

among investors over the credibility of U.S. economic data.