UPDATE 2-FTSE 100 outshines European peers on boost from Unilever, banks

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* Smith+Nephew jumps on reinstating 2021 outlook

* Unilever rises on 3 bln euros share buyback news

* FTSE 100 flat, FTSE 250 dips 0.2% (Updates to market close)

April 29 (Reuters) - London’s FTSE 100 closed flat on Thursday after hitting a one-week high hours earlier as a wave of positive corporate earnings from companies including Standard Chartered and Unilever helped the blue-chip index outperform its European peers.

The index retreated after rising as much as 0.8% to 7,019.71 points during the session, with Standard Chartered gaining about 5.6% after posting a stronger than expected first-quarter profit.

Lender NatWest returned to profit in the first quarter of 2021, joining rivals in releasing some of the cash it had set aside to cover expected bad loans. Its shares, however, fell 3.4%.

“These similar patterns in two of the UK’s biggest banks show that they appear to support the argument that UK consumers have been holding back,” said Michael Hewson, Chief Market Analyst at CMC Markets.

“As (coronavirus) restrictions continue to get eased, we could well see a wave of spending in the summer months, barring any setbacks in the vaccination program, or new variants.”

The banks index added about 1.5% as the Bank of England launched a post-Brexit landmark rethink of regulation that would simplify rules for smaller banks.

The FTSE 100 was further supported by Unilever, which gained 3.3% after announced a 3 billion euro ($3.6 billion) share buyback and said it was confident of hitting sales targets this year.

Meanwhile, European stocks dipped as strong U.S. economic data and German inflation data lifted euro zone bond yields.

The FTSE 100 has gained about 8% year-to-date on optimism that speedy COVID-19 vaccinations and constant policy support from the government would drive a stronger economic recovery.

The domestically focused midcap FTSE 250 index dipped 0.2%.

Retailer WH Smith slipped 3.6% after it warned of the possible risk of breaching its covenant tests in 2022 and launched a potential 325-million-pound ($450 million) bond offering.

Medical products maker Smith+Nephew and ConvaTec Group also jumped 5.6% and 3.7% after they both reinstated their 2021 outlook.

The two-member medical equipment and services index jumped about 5%. (Reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Mark Heinrich)