(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window)

* Oil majors Shell and BP fall as oil prices drop on

US-Iran talks progress

* Hollywood Bowl and Pets at Home lead gains on midcap

index

* Defence stocks gain ahead of UK-Polish treaty

* FTSE 100 up 0.2%, FTSE 250 up 0.8%

May 27 (Reuters) - UK shares edged higher on Wednesday

as hopes of a resolution to the Iran war pushed down crude

prices and lifted risk appetite, with upbeat updates from Pets

at Home and Hollywood Bowl driving gains in the midcap index.

The blue-chip FTSE 100 index rose 0.2% to 10,509.08

points in the mid-session trading, advancing for the eighth

straight session. The midcap FTSE 250 added 0.8%,

inching towards a three-month high.

* UK's defence stocks rose ahead of the signing of new

UK-Polish defence and security treaty on Wednesday, part of

Prime Minister Keir Starmer's efforts to bolster ties with the

rest of Europe.

* Rolls-Royce gained 2% and Chemring ( CMGMF ) advanced

2.7%, while the defence sub-Index added 1.3%.

* Easing bets of rate hikes in the UK have helped prop up

the domestic share rally with the FTSE 100 now within 4% of its

late-February record high.

* Traders have priced in one quarter-point interest rate

increase by the Bank of England before the end of the year with

a 50% chance for another similar-sized move.

* The most up-to-date snapshot of UK consumer behaviour

showed British grocery inflation eased to 3.1% in the four weeks

to May 17, its slowest rate of increase since December 2024,

with the full impact of the Iran conflict yet to reach

supermarket prices.

* Shell and BP dropped about 2% each,

tracking a slide in oil prices as traders assessed progress in

US-Iran talks.

* Hollywood Bowl jumped nearly 15% to the top of

the FTSE 250 index after the leisure bowling operator reported

higher spend per game in both UK and Canada and announced a new

£5 million share buyback.

* Pets at Home rose 6.2% after reporting its

retail sales returned to growth in the fourth quarter and have

accelerated since.

* Amazon said it invested over £15 billion in Britain in

2025, keeping it on track for its £40 billion plan through 2027,

as it expanded sites, studios and drone delivery trials in its

third-largest market globally.