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* FTSE 100 up 0.5 pct
* FTSE 250 hits all-time high, up 0.1 pct
* Banks, insurers lead gains after Yellen comments
* TUI doubles back on previous day's gains
By Helen Reid
LONDON, Feb 15 (Reuters) - Britain's major share index gained on Wednesday, as investors bet on banking stocks after Federal Reserve Chief Janet Yellen's hawkish tone on Tuesday suggested U.S. interest rates would rise.
RBS, Standard Chartered, Barclays and Lloyds were among top gainers, up 1.5 to 2.2 percent, buoyed by Yellen saying the Fed would likely need to raise interest rates at its next meeting.
The FTSE 350 banking index was the top sectoral gainer, up 1.5 percent.
Higher interest rates translate into higher margins for banks, which have been under pressure from a "lower for longer" interest-rate environment.
"In focus today will likely be the second day of Fed Chair Janet Yellen’s testimony, day one having been digested as hawkish, sending the dollar to levels last seen on Jan. 20," said Michael van Dulken from Accendo Markets.
"While the euro has since sold off, note sterling remains rather resilient holding the FTSE back from bettering Monday’s highs."
Construction company Ashtead was the top gainer, up 2.5 percent, and insurers Prudential and Legal & General also gained along with miners BHP Billiton and Anglo American.
Tour operator TUI was the biggest loser on the index, down 5.7 percent after its results prompted exuberance on Tuesday. The stock erased its gains in the previous session.
The mid-cap index hit an all-time high of 18,847.76 points at the open, maintaining momentum from Tuesday's session, and was last up 0.1 percent. Acacia Mining was among top gainers, up 4.2 percent after Credit Suisse raised its rating on the stock to "outperform".
Gambling companies Ladbrokes and William Hill were under pressure, however, down 3.7 and 2.5 percent after HSBC cut its ratings on both stocks to "reduce" from "hold".
NEX Group, a brokerage which reported higher earnings on volatile markets after Donald Trump's election as U.S. president, was also down 3.8 percent. (Reporting by Helen Reid, additional reporting by Kit Rees; Editing by Janet Lawrence)