* FTSE 100 up 0.22%, FTSE 250 rises 0.96%

* Data prompts traders to reassess rate hike bets

* Political uncertainty remains in focus

(Updates after market close)

May 22 (Reuters) - UK's blue-chip FTSE 100 index ended a

four-week losing streak after data released this week weakened

expectations of a Bank of England rate hike, giving relief to

investors unsettled by political uncertainty.

The blue-chip FTSE 100 index ended 0.22% higher on

Friday, notching a 2.66% gain for the week. The midcap FTSE 250

closed up 0.96% for the day.

* British retail sales fell by the most in nearly a year in

April, according to official figures published on Friday, adding

to signs of waning consumer spending against the backdrop of the

war in the Middle East and rising energy costs.

* Earlier this week, separate data also showed that

inflation in April was softer than expected, while the

unemployment rate ticked up.

* "The current economic backdrop is much less conducive to a

long-lasting bout of inflation than it was in 2022," said Ruth

Gregory, deputy chief UK economist at Capital Economics.

* On Thursday, BoE policymaker Alan Taylor also said he saw

less risk of second-round inflation effects ​from rising energy

prices, than in 2022 when Russia invaded Ukraine.

* "Dovish data should reduce the urgency for the BoE to act.

So far the MPC (Monetary Policy Committee) is taking comfort

from tightening in financial conditions which they say can give

them time to assess whether to hike or not," BofA Securities

analysts said.

* The brokerage now expects the central bank to raise

borrowing costs in July, later than its previous estimate of a

June hike.

* "Political uncertainty is likely to increase near-term

policy uncertainty and lead to tighter financial conditions,

which could weigh on growth," the brokerage added.

* Prime Minister Keir Starmer has defied calls from his

party's lawmakers to quit, but his failure to alleviate concerns

about the cost of living has disappointed voters.

* Chemical shares rose 3.45% on Friday, while

aerospace and defence stocks gained 2.76%.