Nov 14 (Reuters) – British stocks rose on Tuesday, reversing early losses, with the domestically-focussed FTSE 250 index surging to a seven-week high following signs of easing inflation in the U.S., though Vodafone slumped following its half-yearly report.

The blue-chip FTSE 100 (.FTSE) rose 0.2% at 1651 GMT, while the mid-cap FTSE 250 (.FTMC) advanced 3.5%

U.S. data showed October inflation was cooler-than-expected, boosting expectations that the Federal Reserve was done raising interest rates and could start cutting them next year.

Following the data, yields on short-term UK Gilts, reflecting near-term interest rate expectations, slid, aiding a 7.0% surge in rate sensitive real estate investment trusts (.FTNMX351020).

“It may well be due to potential sentiment coming ahead of tomorrow’s UK CPI data, with the hope that it comes in lower as well,” said Christopher Peters, trading floor manager at Accendo Markets.

Investors had steered clear of riskier assets towards the latter part of the previous week following signs that the domestic economy was stagnating, while hawkish comments from policymakers in the U.S. stoked fresh credit tightening fears.

UK October CPI data, due on Wednesday, could throw further light on the outlook for domestic monetary policy.

Keeping a lid on gains, Vodafone (VOD.L) reversed earlier gains to fall 5.5%, its worst day in five months after the telecoms group reported quarterly results and said it was considering a range of options for Italy, the last of the “challenging” markets.

The telecommunications sector (.FTUB1510) sank 3.7%.

Among other movers, Glencore (GLEN.L) gained 4.5% after the mining giant agreed to buy a 77% stake in miner Teck Resources’ (TECKb.TO) steelmaking coal business for $6.93 billion in cash.

Informa (INF.L) surged 5.3% after the events organiser increased its full-year revenue and profit expectations, while Entain Plc (ENT.L) dropped 1.2% after brokerage Jefferies downgraded the gambling firm’s rating to “hold” from “buy”.

The aerospace and defence sector (.FTNMX502010) declined 1.6%, with a 0.5% dip in Rolls Royce (RR.L) after airline operator Emirates’ President Tim Clark challenged the engine maker to improve durability and lower maintenance costs.

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