UPDATE 1-British stocks muted as holiday season beckons

UK shares were little changed in light trading on Thursday, as a lack of major drivers led investors to lock in some of the recent gains ahead of the Christmas holiday season. The benchmark FTSE 100 has risen for the last six straight sessions, helped by a breakthrough on a U.S.-China trade deal and a landslide victory for Prime Minister Boris Johnson's Conservative Party in the British general election.

Traders are looking ahead to a Bank of England meeting later on Thursday and a parliamentary vote on Johnson's Brexit deal on Friday, though neither is expected to jolt markets. "Discretion is the better part of valor. Caution is preferable to rash bravery," Markets.com analyst Neil Wilson said, quoting Falstaff - a character from the works of William Shakespeare.

"Data is offering little in the way of a catalyst and with a trade deal baked in, further upside may be tricky in 2019 as traders book profits and start to focus on January 2020." The euphoria around Johnson's win carried into this week but was soon overshadowed by fears of a chaotic Brexit, after the government set a hard deadline of December 2020 to reach a new trade deal with the European Union.

Shares of UK-focussed banks, housebuilders, and retailers, which have swung between sharp gains and losses since the election, were subdued on Thursday. JPMorgan said it sees a 25% chance that Britain's Brexit transition period will end in a 'no-deal' scenario. The investment bank called its estimate "uncomfortably high", but said a new treaty being signed was still the most likely scenario.

Still, the FTSE 100 is firmly on course for its ninth month of gains this year, while the midcaps are set to rise for the fourth successive month. Rating actions drove some moves, with blue-chip tour operator TUI dipping 2% after Berenberg cut its rating on the stock. Mid-cap outsourcing group Capita dropped 4% on a Deutsche Bank rating downgrade.

NMC Health dropped another 6%, adding to a more than 30% decline since Tuesday when Muddy Waters disclosed a short position in the healthcare company.