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FTSE 100 rebounds on trade resolution hopes, IAG takes off

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* FTSE 100 up 0.5%; FTSE 250 up 0.6%

* U.S.-China trade talks remain in focus

* IAG jumps after Q1 results

* Small-cap Lonmin skids after forecast revision

May 10 (Reuters) - London's main index jumped as investors held out for a resolution to the Sino-U.S. trade dispute even as higher U.S. tariffs on more Chinese goods took effect, and airline group IAG rose after in-line first-quarter results.

The FTSE 100 was up 0.5% and the FTSE 250 was up 0.6% by 0725 GMT, ahead of GDP data.

China on Thursday appealed to Washington to meet it halfway to salvage a deal that could end their trade war, with talks between Chinese Vice Premier Liu He and U.S. representatives set to resume on Friday.

Asia-exposed financial heavyweights HSBC and Prudential rose as a result, while hopes of easing tensions also helped copper prices and guided miners higher.

The higher U.S. tariff "marks a sharp escalation in the trade spat, but it's not gone nuclear yet," Markets.com analyst Neil Wilson said.

In corporate news, British Airways owner IAG advanced 4.6% after it posted quarterly results in line with expectations.

But AstraZeneca slipped 1.3 percent after an anemia treatment developed by the company and its partners did not show a meaningful difference in risk of major adverse cardiac events against Pfizer's approved drug.

Among small stocks, London-listed shares of platinum miner Lonmin tumbled 6.1% after it said annual sales would be at the lower end of its target range, partly due to delays in a takeover by Sibanye-Stillwater.

Thomas Cook gained 5.5% after a Sky News report on Thursday that Virgin Atlantic had tabled an offer for the tour operator's long-haul unit. (Reporting by Shashwat Awasthi in Bengaluru Editing by Raissa Kasolowsky)