Wires

UPDATE 2-FTSE 100 gains for ninth straight session, midcaps near record high

Shashwat Awasthi

* FTSE 100 up 0.5%, FTSE 250 up 0.8%

* Markets seeing "classic squeeze" - analyst

* NMC enjoys best day ever

* Nichols slumps after profit alert (Adds news items, analyst comments, updates to closing prices)

Dec 23 (Reuters) - Britain's blue-chip equities index gained for a ninth straight session on Monday in holiday-thinned trading, while midcaps hovered near all-time highs.

The FTSE 100 rose 0.5% to hit its highest in nearly five months and match its best run of gains since May 2017. The FTSE 250 jumped 0.8%, up for the third straight session.

Both benchmark indexes drifted lower in early dealings as traders locked in profits ahead of Christmas, but a lack of negative news and paltry trading volumes helped them recover.

"Given the low liquidity conditions, it does not take much to change the market," Raymond James analyst Chris Bailey said. "Note too the lack of real losers. Classic squeeze up just ahead of Christmas."

The stand-out gainer was NMC Health, which surged almost 37% on its best day ever after it promised an independent review of its books. Its shares had nearly halved in value last week after short-selling firm Muddy Waters questioned its finances.

"The fact the company is taking such action implies they don't have anything to hide, which has encouraged some traders to swoop in and snap up the relatively cheap stock," CMC Markets analyst David Madden said.

Dealers seemed content to reflect on major developments of the month, including a breakthrough in U.S.-China trade talks and UK Prime Minister Boris Johnson's election victory which have helped the FTSE 100 surge nearly 5% in the last two weeks.

The exporter-heavy index is on course for its best month since June, while the more domestically-focussed midcaps are on track for a fourth straight month of gains. Both benchmark indexes look set for their ninth month of gains this year.

Some of that momentum has eased after Johnson's hard line on a trade agreement with the European Union revived fears of a chaotic Brexit and market players are likely to hold off on making further bets before the new year.

Lingering Brexit concerns left sterling hamstrung on Monday, boosting firms with a larger international exposure such as Shell, Unilever and Diageo, which lent further support to the main index.

Other news-driven moves saw AIM-listed Nichols drop 10% to its lowest since Jan. 3, after the Vimto soft drinks maker warned on its 2020 profit. (Reporting by Shashwat Awasthi in Bengaluru, Editing by Saumyadeb Chakrabarty and Mark Potter)