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UPDATE 2-FTSE 100 flat on mixed earnings, Sino-U.S. tensions; BP, easyJet surge

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    * BP up 6.5% as it speeds up reinvention
    * Diageo sales plunge on lower alcohol demand
    * EasyJet jumps on plan to resume more flights
    * FTSE 100 off 0.05%, FTSE 250 adds 0.9%

 (Updates to close)
    By Sagarika Jaisinghani and Susan Mathew
    Aug 4 (Reuters) - London's blue-chip FTSE 100 ended flat on
Tuesday as mixed earnings and rising friction between the United
States and China weighed, while a surge in budget airline
easyJet on adding more flights lifted the mid-caps index.  
    Spirits maker Diageo Plc         was the biggest drag on the
FTSE 100         as coronavirus lockdowns saw it take a 1.3
billion pound writedown and report a bigger-than-expected
decline in underlying net sales.                         
    Oil major BP Plc       , meanwhile, posted its best day in
two months after unveiling earlier than expected a plan to
reduce its oil and gas output by 40% and boost investments in
renewable energy over the next decade.             
    Sino-U.S. tensions escalated following U.S. President Donald
Trump's move to force a sale of Chinese-owned video app TikTok's
U.S. operations. China will not accept the "theft" of its
technology company and is able to respond to Washington's move,
the China Daily said.                        
    The FTSE 100 has struggled to build on a stimulus-led stock
market rally with the world sliding into a deep recession and
surging COVID-19 cases threatening even more
    The focus this week is on a Bank of England meeting where it
is expected to hold interest rates and shed more light on the
pace of an expected domestic rebound.             
    "As the (BoE) wants to keep its powder dry for as long as
possible, we don't expect any bold statements or strong hints at
additional easing," said Stefan Koopman, senior market economist
at Rabobank. 
    But a monetary policy response could be seen by November,
Koopman said, given Brexit-related risks, a possible second wave
of the virus and increasing unemployment. 
    The mid-cap FTSE 250         rose 0.9% as easyJet Plc
        jumped 8.8% on plans to fly at 40% of its capacity over
the rest of the summer, while a first-half profit beat saw
insurer Direct Line          hit five-month highs.             
    But a 9.4% slump for Babcock following a plunge in quarterly
profit, capped gains.             

 (Reporting by Sagarika Jaisinghani in Bengaluru; Editing by
Subhranshu Sahu and Lisa Shumaker)