UPDATE 2-UK blue chips index gains for fourth day; Sainsbury surges

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* Sainsbury surges on raising full-year forecast

* Mining stocks rise the most on FTSE 100

* Ryanair slashes annual traffic forecast

* FTSE 100 up 0.2%, FTSE 250 adds 0.2% (Updates to market close, adds analyst comments)

Jan 7 (Reuters) - Britain’s blue-chip FTSE 100 index ended higher on Thursday as investors bet on a bigger U.S. stimulus package under a Democrat administration, while retailer Sainsbury jumped after raising its profit outlook.

The index rose 0.2%, gaining for a fourth straight day, with Sainsbury surging to the top.

Shares in the supermarket owner jumped 6.9% after it raised its full-year profit forecast as it benefited from COVID-19 restrictions that forced people to stay at home.

Materials stocks including Rio Tinto plc, CRH Plc and Anglo American Plc added between 2.7% and 3.6%.

The domestically focused mid-cap FTSE 250 gained 0.2%.

“This is a kind of consolidation day today after a 4% move yesterday and a lot of people are focused on the U.S. right now,” said Keith Temperton, a sales trader at Forte Securities.

“There is encouragement in terms of the outlook for the market.”

Hours after hundreds of President Donald Trump’s supporters stormed the U.S. Capitol, a shaken Congress formally certified Democrat Joe Biden’s election victory.

Global equity markets gained in anticipation of big borrowing and big spending under a Biden administration that would help support economic growth at a time when the coronavirus crisis continues to ravage several businesses globally.

Surging coronavirus cases and fears of a new wave of corporate bankruptcies have ratcheted up concerns around the economic damage from the COVID-19 pandemic.

Around 4,000 financial firms in Britain are at “heightened risk” of collapsing due to fallout from the first wave of the pandemic, the Financial Conduct Authority said.

London-listed shares in Europe’s largest low-cost carrier, Ryanair, dropped 1.0% after it slashed its annual traffic forecast due to new lockdowns in Britain and Ireland.

Fashion retailer Joules dropped 5.5% after reporting a plunge in total store sales in a seven-week period that included the Christmas holiday season. (Reporting by Shashank Nayar and Shivani Kumaresan in Bengaluru; editing by Uttaresh.V and Kevin Liffey)