UPDATE 2-Banks push FTSE 100 higher, while BoE spurs economic hopes

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

* UK gilt yields hit one-year high

* 888 Holdings jumps on strong earnings

* FTSE 100 up 0.3%, FTSE 250 flat (Updates to close)

March 18 (Reuters) - London’s FTSE 100 ended higher on Thursday, with bank stocks providing the biggest boost after a spike in treasury yields, while encouraging statements from the Bank of England raised hopes over the short-term economic outlook.

After falling as much as 0.31%, the blue-chip FTSE 100 index turned upwards, eventually ending 0.3% higher.

Bank stocks including HSBC Holdings, Standard Chartered, Barclays were the top boosts to the index as U.S. treasury yields hit 14-month highs on dovish statements from the Federal Reserve.

Heavyweight mining stocks including Rio Tinto, BHP Group and Anglo American gained on higher base metal prices.

The Bank of England said Britain’s economic recovery was gathering pace thanks to the speed of COVID-19 vaccinations while its policymakers were split over the prospects for longer-term improvement, dampening speculation about a reversal of stimulus.

“Central bankers often like to highlight that the outlook is ‘unusually uncertain’, but the Monetary Policy Committee is feeling a little more comfortable about the prospects for the economy than at its last meeting six weeks ago,” said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.

British 10-year gilt yields rose to a one-year high after BoE’s statement.

The domestically focused mid-cap FTSE 250 index ended flat, with gains in industrials and financials offset by losses in real estate stocks.

A recent rise in treasury yields had hampered an otherwise strong start to the year for UK blue chips, although the midcap index has fared better than its larger peer on hopes of a vaccine-led economic recovery this year.

Gambling group 888 Holdings rose 4.5%, after posting higher annual adjusted core earnings and signalling strong momentum in 2021 so far, as more people shifted to online betting during coronavirus restrictions.

Drinks maker Fever-Tree fell 12.3%, despite a better 2021 revenue forecast with at-home drinking catching on and sales at lockdown-hit bars and restaurants expected to gradually gain momentum. (Reporting by Shivani Kumaresan and Amal S in Bengaluru; Editing by Subhranshu Sahu and Hugh Lawson)