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* British finance minister announces new jobs support plan
* Brexit negotiators say they are inching towards a deal
* UK GDP grows slower-than-expected in August
* FTSE 100 gains 0.7%, FTSE 250 up 0.7% (Updates with closing prices)
Oct 9 (Reuters) - London’s FTSE 100 closed at a three-week high on Friday, as a new jobs support plan and advancements in Brexit talks eclipsed worries about a fresh surge in COVID-19 cases.
British finance minister Rishi Sunak announced his latest programme to stave off a surge in unemployment, offering extra help for businesses and workers who are forced to stop work during local coronavirus lockdowns.
Meanwhile, the two chief Brexit negotiators said they are inching towards a deal. But they have underscored that important gaps remain on fishing, level playing field issues and governance and both sides have no-deal plans.
The FTSE 100 index climbed for the second consecutive week and ended higher by 0.7%, with mining and oil stocks leading gains. The mid-cap index added 0.7% and closed near a two-month high.
Capping gains, however, was a slower-than-expected growth in Britain’s economy in August from July and a surge in COVID-19 cases in England.
“Traders are beginning to enter the bad-news-is-good-news mode, as they feel there is more room left for the UK government to undertake fresh stimulus steps as headline data continue to disappoint,” said Roland Kaloyan, a strategist at SocGen.
Higher oil prices, hopes of fresh U.S. stimulus and a more positive tone to Brexit talks have supported the export-heavy blue-chip index over the past two weeks, offsetting worries about the economic damage wreaked by the coronavirus pandemic.
Real estate firm British Land rose 3.1% after saying it would resume paying dividends in November and that it was in active talks with tenants on rent payments.
TP ICAP, the world’s biggest inter-dealer broker, dropped 2.1% after announcing plans to raise about $425 million through a rights issue to buy Liquidnet Holdings for between $575 million and $700 million. (Reporting by Shashank Nayar in Bengaluru; Editing by Uttaresh.V and Alexander Smith)