(For a live blog on European stocks, type LIVE/ in an Eikon news window)
* HSBC surges after largest shareholder boosts stake
* London mulls tougher COVID-19 lockdown measures
* William Hill slumps as takeover offer disappoints
* FTSE 100 up 1.4%, FTSE 250 gains 1.1% (Updates prices, adds comment)
By Shashank Nayar
Sept 28 (Reuters) - London's FTSE 100 rose on Monday as solid Chinese industrial profits data boosted commodity-linked stocks and Asia-focussed lender HSBC surged after its top shareholder raised its stake.
British lender HSBC Holdings jumped 10.1% after Chinese insurance group Ping An , the biggest shareholder, boosted its stake to 8%.
The blue-chip FTSE 100 index jumped 1.4%, with beverage makers leading gains after Diageo reported an improved half yearly outlook.
"The rebound seen today can mostly be on account of HSBC's jump but that is a one-off story," said David Madden, an analyst at CMC markets.
"The larger market sentiment continues to be risk-averse towards British markets with second wave fears still holding its grip."
Expectations of fresh lockdown measures in the wake of rising COVID-19 cases, coupled with uncertainty about a swift economic recovery, have led investors to be largely risk-averse towards British stocks as they continue to underperform their peers in developed markets.
The British government is mulling tougher restrictions in England to tackle a swiftly accelerating second wave of the outbreak, possibly outlawing more inter-household socialising, a junior health minister said.
The mid-cap FTSE 250 index climbed 1.1% and was on track for a second consecutive session of gains with construction and industrial stocks being the biggest boost.
Data released over the weekend showed profits at China's industrial firms grew for the fourth straight month in August, buoyed in part by a rebound in commodities prices and equipment manufacturing.
In company news, miner Bluebird Merchant Ventures surged to an all-time high after it said South Korean investors advanced their funding schedule and committed to a maximum funding of $20 million.
Pub owner William Hill fell 12.5% following Caesars' 272 pence per share takeover offer, which was far below market expectations. (Reporting by Shashank Nayar in Bengaluru; Editing by Subhranshu Sahu)