UPDATE 2-HSBC, Diageo drive gains in London's FTSE 100

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* HSBC surges after largest shareholder boosts stake
* Banks mark best day since May, 2010
* Diageo up; CEO says outlook for HY fiscal '21 has improved
* William Hill , mining giants decline
* FTSE 100 up 1.5%, FTSE 250 gains 1.9%

(Updates with close)
By Shashank Nayar and Susan Mathew
Sept 28 (Reuters) - A surge in HSBC after its largest
shareholder boosted its stake and an upbeat outlook from
spirits maker Diageo, combined with strong economic data from
China, lifted London's FTSE 100 index on Monday.
The blue-chip index .FTSE closed up 1.5% as Asia-focussed
lender HSBC Holdings HSBA.L jumped 8.9% after Chinese
insurance group Ping An 601318.SS 2318.HK boosted its stake
to 8%. Britain's banking index .FTNMX8350 surged 8.2% for its
biggest one-day gain in over a decade.
Beverage makers .FTNMX3530 jumped 5.6% to mark their best
day in six months after Diageo DGE.L said its outlook for the
first half was improving. Broader sentiment was upbeat after data showed profits at
China's industrial firms grew for the fourth straight month in
August, keeping hopes for an economic recovery
alive. MKTS/GLOB
"We remain in a buy on dip mode, but do not believe we have
yet reached the bottom," said Sebastian Galy, a senior macro
strategist at Nordea Asset Management, attributing the day's
moves to month-end buying.
Despite the jump, the index is still down on levels seen at
the end of August.
Expectations of fresh lockdown measures in the wake of
rising COVID-19 cases, uncertainty about a swift economic
recovery and the risk of Brexit without a trade deal have led
investors to largely shun British stocks as they continue to
underperform developed markets peers.
"In a period of consolidation, the tendency is to be focused
on the short-term which is worrying," Galy said. "(U.S. jobs
data) are also likely to show a significant slowdown in economic
activity. Such fluctuations ... do suggest we have not finished
this consolidation in equities."
The mid-cap FTSE 250 index .FTMC climbed 1.9%, although an
11.6% decline in bookmaker William Hill WMH.L kept a lid on
gains. A takeover offer for the company from U.S. casino
operator Caesars CZR.O was far below market expectations.
After a rise of up to 0.8% following the China data, mining
giants .FTNMX1770 closed down 0.7%.