FTSE 100 closes higher as banks track strong US earnings

July 14 (Reuters) - Britain's FTSE 100 closed higher on Tuesday, reversing early losses, as bank stocks led gains after strong U.S. lender earnings kicked off the reporting season and a softer-than-expected U.S. inflation reading boosted bets on interest rate cuts.

The FTSE 100 ended up 0.3%, at 10,529.39, having earlier fallen as low as 10,422.98. The FTSE 250 midcap index was about flat at 23,406.83.

• Wall Street banks posted strong second-quarter earnings with a boost from fees for advising on deals and surging trading ‌revenue, lifting their peers across the pond. In the UK, Barclays and HSBC both gained 1.9%, while Lloyds added 1%, offering the top boost to the FTSE 100.

• Glencore rose 3%, Rio Tinto gained 3.3% and Anglo American added 2.4% on strength in industrial metals prices. [MET/L]

• Energy stocks provided further support after BP rose 2.2%, saying robust oil trading and higher refining margins would lift ‌second-quarter earnings. Shell gained 1.2% as Brent crude held above $85, near four-week highs. [O/R]

• Earlier, investor sentiment was dampened by growing bets on Bank of England rate hikes, higher oil prices amid Gulf tensions, and comments from a top Federal Reserve official that pointed to a near-term rate increase.

• Meanwhile, U.S. consumer inflation slowed more than expected in June, tempering expectations for U.S. Federal Reserve policy tightening and further boosting U.S. stocks. [.N]

• Healthcare stocks were the biggest drag. GSK fell 1.7% and AstraZeneca declined 2%.

• Debenhams Group rose 3.1% after the online retailer said positive trading momentum continued through June and July.

(Reporting by Tharuniyaa Lakshmi and Medha Singh in Bengaluru; Editing by Leroy Leo and Aurora Ellis)