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Updated at 1556 GMT

By Pranav Kashyap, Shubham Batra and Khushi Singh

April 22 (Reuters) -London stocks gained over 1% on Monday, as M&A action spurred on the FTSE 250 and markets were also cheered by interest rate futures indicating the Bank of England's cuts would begin in August.

The benchmark FTSE 100 .FTSE rose 1.6% as of 1556 GMT, hovering near highest levels since February 2023, while the FTSE 250 .FTMC index gained 1.1%. Both indexes marked biggest 1-day percentage gains in a month.

Tyman TYMN.L led the rise in mid-cap stocks after it surged 34.0% on a $976 million buyout deal by Quanex Building Products NX.N. The broader construction and materials .FTNMX501010 index jumped 3.3%, leading sectoral gains.

Hipgnosis Songs Fund SONG.L also boosted the FTSE 250 with a 11.6% rise as Blackstone BX.N made a potential offer to buy the company that owns rights to music by artists including Shakira and Red Hot Chilli Peppers for about $1.5 billion.

Meanwhile, investor sentiment also got a boost as financial markets fully priced in a first quarter-point rate cut by the BoE for August and see at least two cuts before the end of the year, an earlier start to loosening than priced in last week.

By contrast, precious metal miners .FTNMX551030 was the bottom performing index, slipping 2.2% as gold prices eased over 2% after Iran played down the risks of an escalation. GOL/ O/R

"When precious metals experience the type of gains they’ve seen over the last 10 weeks, sell-offs can be deep, but also quite short-lived," said David Morrison, Senior Market Analyst at Trade Nation.

Among individual stocks, shares of Marks & Spencer Group MKS.L jumped 4.4% to the top of FTSE 100 after Jefferies raised the stock to "Buy" from "Hold".

Mobico's MCG.L shares led declines on FTSE 250, falling 9.8%, as the National Express owner's finance chief will step down in June, the company said after reporting a more than 14% fall in 2023 profit.

Chill Brands CHLL.L fell 17.5% after the vape-maker suspended CEO Callum Sommerton after allegations were raised around the company's use of inside information. Sommerton said he was surprised and disappointed by the allegations.

Meanwhile, an industry survey showed that prices of homes being sold in Britain are close to their record highs after the biggest annual increase in a year.

Reporting by Pranav Kashyap, Khushi Singh and Shubham Batra in Bengaluru; Editing by Mrigank Dhaniwala and Alison Williams

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