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UPDATE 1-FTSE jumps on optimism over Brexit, Hong Kong unrest

Muvija M and Shashwat Awasthi

* FTSE 100 up 0.8%, FTSE 250 up 0.7%

* Financials, Burberry lead gains for main bourse

* Homebuilder Barratt falls after results

* Avast slumps after No. 2 shareholder dumps stake (Adds company news items, analyst comment, updates share moves)

Sept 4 (Reuters) - London's main index vaulted to a one-month high on Wednesday, as Asia-exposed stocks surged after a report indicated the Hong Kong protests could end, while UK banks rose following parliament's success in taking steps to avert a no-deal Brexit.

The FTSE 100 index was up 0.8% and the midcap index rose 0.7% by 0753 GMT, after falling in the previous session amid growing possibilities of a snap election in Britain that would bring new risks to Brexit.

Prime Minister Boris Johnson lost his working majority in parliament on Tuesday and lawmakers defeated him in a bid to prevent a no-deal Brexit. That prompted Johnson to announce that he would push for a snap election.

"An election has to happen sooner or later - surely it is better to happen now?," Markets.com analyst Neil Wilson said.

Asia-focussed banks Prudential and HSBC advanced 7% and 2%, respectively, while UK's so-called "big banks", such as Lloyds and RBS also rose on hopes that a no-deal Brexit could yet be prevented.

An index of banks surged 2% as a result, heading for its biggest one-day gain since January.

A Brexit delay vote is set for later in the day.

Meanwhile, adding to investor enthusiasm was a report Hong Kong's leader would announce the formal withdrawal of a proposed extradition bill that is at the centre of months of protests drove luxury brand Burberry 4% higher.

The main FTSE 100 bourse had suffered its worst monthly fall this year in August when markets witnessed sharp escalations in the Sino-U.S. trade tussle and an inversion of U.S. Treasury bond yields, which had raised fears of a recession.

Among a handful of losers was Barratt, Britain's biggest housebuilder, after it warned that volume would grow towards the lower end of its target range in the current year.

Avast tumbled 5% to the bottom of the FTSE 250 after second-biggest shareholder dissolved its stake in the cybersecurity company, while small-cap specialist pension provider Just Group slumped 10.1% after posting results.

QUIZ Plc slumped 14% after the retailer said the number of shoppers coming into its fast-fashion stores had fallen this year. The stock is set for its steepest one-day drop since June when the company's annual results showed pretax profit had collapsed from a year earlier.

Marks & Spencer, meanwhile, added 3%. The stock has dipped this week ahead of its possible relegation from the FTSE 100.

(Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Bernard Orr)