UPDATE 2-UK blue chips hit 10-month high as bank and energy stocks gain

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* FTSE 100 highest since late February 2020
* Oil prices surge to 11-month highs
* Food retailer Greggs says sales decline slowed
* FTSE 100 up 3.5%, FTSE 250 up 1.2%

(Updates to market close, adds analyst comments)
By Shashank Nayar and Shivani Kumaresan
Jan 6 (Reuters) - Britain's blue-chip FTSE 100 index ended
at its highest since February on Wednesday, led by banking and
energy stocks as investors bet on more U.S. stimulus and crude
oil prices jumped after Saudi Arabia agreed to cut more output
than expected.
The exporter-heavy FTSE 100 index .FTSE rose 3.5%,
clocking its third consecutive session of gains. Lenders HSBC
HSBA.L , Barclays BARC.L and Standard Chartered STAN.L
provided the biggest boost with gains between 8% and 9.6%.
The mid-cap FTSE 250 index .FTMC was up 1.2%.
Investors globally eyed a Democratic sweep of the U.S.
Senate that could result in a bigger fiscal stimulus.
"Once we get past the U.S. political situation, COVID is
going to be increasingly front and centre," said Craig Erlam,
senior market analyst at OANDA.
Oil heavyweights BP BP.L and Royal Dutch Shell RDSa.L
rose almost 6.5% as crude prices gained after Saudi Arabia said
it would make additional, voluntary oil output cuts of 1 million
barrels per day in February and March. O/R
Investors also looked past the near-term effects of the new
lockdowns imposed to curb a surge in coronavirus cases to bet on
a quicker economic recovery.
"There is huge liquidity being infused by the central bank
which will continue to support markets in addition to an
extremely positive 2021 growth outlook," said James Gutman, head
of investment portfolios at Dolfin Financial.
British stocks began the year on a positive note, boosted by
fresh stimulus, and the government's aim to vaccinate around 14
million of the most vulnerable against the COVID-19 virus by
mid-February.
The world's largest exhibitions group Informa Plc INF.L
rose 6.4% even after forecasting a more than 70% plunge in its
2020 profit. British baker and fast food retailer Greggs GRG.L closed
higher at 7.8% after it said sales decline had slowed, but
warned it does not expect profit to return to pre-pandemic
levels until 2022.