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UPDATE 1-FTSE 100 gains on hope for trade deal; strong GDP boosts midcaps

* FTSE 100 up 0.6%; FTSE 250 up 0.7%

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

* IAG jumps after first-quarter results

* Small-cap Lonmin skids after forecast cut (Adds GDP data, updates share moves, changes analyst comment)

May 10 (Reuters) - London's main index rose as investors hoped for a resolution to the Sino-U.S. trade dispute, even though the United States raised tariffs on Chinese goods.

The FTSE 100 was up 0.6% by 0836 GMT. The more domestically-focussed FTSE 250 rose 0.7% after data showed British economic growth accelerated in the first quarter.

Talks between Chinese Vice Premier Liu He and U.S. trade representatives were set to resume on Friday. Earlier in the day, the United States raised tariffs to 25% on $200 billion worth of Chinese goods.

"There is the possibility that tariffs could still be avoided given that U.S. officials allowed for goods currently in transit to be exempt from the new tariff increases, which means there is a potential window, albeit a limited one, for an agreement to be hammered out," CMC Markets analyst Michael Hewson said.

Asia-exposed HSBC and Prudential rose as a result. Hopes of easing tensions also helped copper prices and pushed mining shares higher.

British Airways owner IAG advanced 4.6% after it posted quarterly profit in line with expectations.

"It's not every day you'll see a company's profits fall so sharply but the shares still rise. But when your competitors have slipped into a loss, it's perhaps not a surprise," Hargreaves Lansdown analyst George Salmon said.

AstraZeneca slipped 1% after ambiguous results in test of an anaemia treatment developed by the company and its partners.

Wealth management provider Brewin Dolphin gave up 3.7% on the midcap index after reporting a drop in half-year earnings.

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

Thomas Cook jumped 9% after Sky News reported on Thursday that Virgin Atlantic had offered to buy the Thomas Cook long-haul business. (Reporting by Shashwat Awasthi and Muvija M in Bengaluru, editing by Larry King)