UPDATE 1-FTSE 100 hits a two-week high in kick-off to new year trade

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Jan 2 (Reuters) - The UK's FTSE 100 advanced higher on Thursday, the first trading session of the year, boosted by gains in commodity-linked stocks.

The blue-chip FTSE 100 .FTSE rose 1.1% to an over two-week high, logging its best day since Nov. 22. The mid-cap FTSE 250 .FTMC was near flat after touching a two-week high earlier in the session.

Precious metals miners .FTNMX551030 rose 4.6%, leading gains among sectors, as gold hit a two-week high on safe-haven demand and lower U.S. Treasury yields, with investor focus on the U.S. interest rate outlook and policies under the new incoming Donald Trump administration. GOL/

Energy stocks <.FTNMX601010> gained 2.2%, and were the biggest boosts. Oil heavyweights such as BP BP.L and Shell SHEL.L rose 2.6% and 2.1% respectively, as crude prices LCOc1, CLc1 were buoyed by expectations of more stimulus for China's slowing economy. O/R

On the flip side, homebuilders .FTNMX402020 led sectoral losses with a 0.9% fall.

Data-wise, a survey showed British factory activity shrank at the fastest pace in 11 months in December, as manufacturers cut staffing levels in response to higher taxes and weak foreign demand.

The FTSE 100 recorded an over 5% rise in 2024, its fourth consecutive year of gains, as the UK economy held up better than expected and the Bank of England kicked off its monetary policy easing cycle.

The BoE has, however, said it will move gradually with further cuts to borrowing costs as it monitors whether the tax hikes announced in Finance Minister Rachel Reeves' October budget add to inflation pressures.

Traders are pricing in more than 59 basis points in rate cuts after two cuts in 2024. 0#BOEWATCH

(Reporting by Sruthi Shankar and Sukriti Gupta in Bengaluru; Editing by Vijay Kishore; Editing by Aurora Ellis)

((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2787;))

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