UPDATE 2-Big oil, tobacco firms help FTSE 100 outshine Europe

* FTSE 100 up 0.2%, FTSE 250 down 0.5%
* U.S. kills Iranian major general, Iraqi militia commander
* Investors pile into oil
* Tobacco cos up on U.S. regulator action
* Gambling cos fall among midcaps

(Writes through)
By Shashwat Awasthi
Jan 3 (Reuters) - London's main stock index overturned
earlier loses to end higher on Friday as a U.S. air strike in
Iraq stoked fears of a disruption in crude supply, supporting
shares of oil heavyweights, and as tobacco stocks firmed.
The FTSE 100 .FTSE had been pressured for most of the
session as rising geopolitical tensions after the air strike,
that killed top Iranian and Iraqi commanders, drove investors
away from risky assets and towards safe havens such as gold.
But Shell RDSa.L and BP BP.L jumped more than 2% each
and the oil sector almost single-handedly helped the blue-chip
bourse record a 0.2% gain and outperform the European benchmark
.STOXX .
BAT BATS.L and Imperial Brands IMB.L added 2.5% each to
lend further support after the U.S. health regulator exempted
menthol and tobacco from a list of e-cigarette flavours that it
has banned under new guidelines. The more domestically focused FTSE 250 .FTMC shed 0.5%,
however, as weak UK construction data and the broader risk-off
sentiment weighed. "Chances that a further escalation of tensions (by Tehran)
with Washington can be avoided appear to be low," Cityindex
analyst Ken Odeluga said. "Risk assets therefore look unlikely
to reclaim their solid advance out of the gates in 2020 anytime
soon."
Prospects of higher fuel costs dragged shares of airline
companies lower. easyJet EZJ.L and British Airways owner IAG
ICAG.L gave up 1.7% and 3.4%, respectively.
Gambling stocks were knocked after a report https://www.thetimes.co.uk/article/betting-websites-face-ban-on-vip-gambling-schemes-lh7njt3k5#
that firms could be banned from running "VIP schemes" that
reward gamblers who regularly lose large sums with free bets and
offer cashback on losing wagers.
William Hill WMH.L , Playtech PTEC.L and GVC GVC.L fell
between 0.7% and 4.7%.
Payment solutions firm Finablr FINF.L slipped 4% after its
unit, Travelex, said on Thursday it had taken all its systems
offline after being hit by a software virus. Galliford GFRD.L soared almost 78% on its best day ever,
reflecting an adjustment to the share price following the
completion of the demerger and sale of its housebuilding
business to Bovis Homes BVS.L .
Both UK benchmark indexes ended the holiday-shortened week
modestly lower.
Profit-taking before the turn of the decade had eaten into
the indexes' gains earlier this week and Odeluga warned Friday's
events in the Middle East could cause sentiment to remain
subdued.
"Worries that forecasts of moderate stock market progress
may be in jeopardy won't be easy to allay," he said.