UK's FTSE 100 rises as banks gain on relaxed capital rules

• FTSE 100 up 0.4%, FTSE 250 flat
• BoE eases capital requirements
• UK set for faster growth in 2026, OECD forecasts

Dec 2 (Reuters) - UK's FTSE 100 inched higher on Tuesday, lifted by financial stocks after the Bank of England eased capital requirements for lenders in a bid to boost growth, while industrial shares rebounded after suffering a sharp drop in the previous session.

The blue-chip FTSE 100 .FTSE rose 0.4% by 1119 GMT, while midcap FTSE 250 .FTMC was flat, reversing course after it had the biggest single-day percentage drop in two weeks on Monday.

Shares of Lloyds Banking Group LLOY.L gained 1.6%, the most among banks, while HSBC Holdings HSBA.L, Barclays BARC.L, and Standard Chartered STAN.L added between 0.9% and 1.3%.

The broader banks index .FTNMX301010 climbed 1.2% as Britain's central bank cut the amount of capital it estimates lenders need to hold for the first time since the global financial crisis after the lenders passed its stress test.

Chemicals stocks .FTNMX552010 were also in a bright spot, up 1%, with Victrex VCTX.L jumping 7%, after the thermoplastic polymer maker announced higher full-year sales.

Britain's economy will grow faster than previously expected next year, the OECD said on Tuesday, citing the impact of Finance Minister Rachel Reeves' budget on consumption and drag from global uncertainty that could keep pressure on inflation.

Last week Reeves' long-awaited budget soothed some concerns about Britain's long-term finances, fuelling a rally in UK shares, bonds and the pound.

Investors in the global markets are awaiting the decision from the U.S. Federal Reserve on interest rates next week, with markets expecting a 25-basis-point rate cut.

The Bank of England is expected to deliver a similar sized move later in the month.

On the flip side, precious metal miners .FTNMX551030 slid 1.6% after gold prices fell, while industrial metal miners .FTNMX551020 dipped 0.2% as copper came off a record high.