UPDATE 2-Weaker pound, retail stocks boosts FTSE 100; Mid-caps end best day in two-weeks;

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* Morgan Sindall top mid-cap gainer on raising outlook

* Manufacturers' hopes for an economic strongest in 48 years

* Metro Bank jumps on aim to expand lending tenfold

* FTSE 100 up 0.6%, FTSE 250 adds 1.3% (Updates to close)

By Devik Jain and Shashank Nayar

April 22 (Reuters) - Britain's FTSE 100 ended higher on Thursday on higher retail stocks as last week saw a jump in footfalls and a weaker pound, while mid-caps rose to their best day in two weeks led by gains in construction company Morgan Sindall.

The blue-chip FTSE 100 .FTSE ended 0.6% higher, with retailers .FTNMX404010 gaining nearly 2% as shoppers rushed rushed back to clothes and furniture stores last week when they reopened after three months of COVID lockdown restrictions. pound GBP= fell 0.6%, erasing the week's gains against the dollar, as investors weighed up the outlook for an economic recovery in Britain.

The domestically-focussed mid-cap index .FTMC gained 1.3%, with construction company Morgan Sindall MGNS.L up 19.6% as brokerages raised their price targets on the stock after it raised its annual outlook. markets are optimistic about the economic rebound process as the vaccination drive gathers more ground and there remains significant upside as there is still a large area until we get back to pre-COVID levels,” said Michael Baker, an analyst at ETX Capital.

The FTSE 100 has gained ~7% year-to-date on optimism that speedy COVID-19 vaccinations and constant policy support from the government would drive a stronger economic recovery, however it has largely underperformed its European peers.

British manufacturers' hopes for an economic rebound to their strongest in 48 years this month as the country began to recover from the slump caused by the COVID-19 pandemic, the Confederation of British Industry said, further aiding sentiment. other stocks, Russia's Polymetal International POLYP.L added 2.1% after its first-quarter production grew 3%. Metro Bank MTRO.L gained 0.6% on aims to expand its consumer finance lending tenfold to 2 billion pounds ($2.78 billion), a source familiar with the plan told Reuters, as it seeks to reverse a sharp downturn in its fortunes in the last two years.