UPDATE 2-UK shares surge as upbeat factory activity data lifts global sentiment; HSBC drags

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* HSBC slides to over 11-year low as profit plunges 65%

* UK, euro zone, U.S. report rise in factory output

* Engineer Senior, insurer Hiscox swing to first-half loss

* FTSE 100 up 2.3%, FTSE 250 gains 1.3% (Updates to close)

By Sagarika Jaisinghani and Susan Mathew

Aug 3 (Reuters) - London's FTSE 100 posted its best session in seven weeks on Monday as an uptick in UK factory activity tied in with similar data from Germany and United States to raise economic recovery hopes, although HSBC's slide after results capped gains.

Lender HSBC slid 2.9% to its lowest since 2009 as the coronavirus crisis saw it flag mounting bad debt charges and miss profit expectations, sending the FTSE 100 to its lowest since mid-May, before sentiment turned.

After marking its worst week since mid-June on Friday, the blue-chips index closed up 2.3%.

Data showed British manufacturing output last month grew at its fastest pace in nearly three years, while Germany reported an expansion for the first time since 2018. Earlier in the day, China - one of UK's major trading partners, also reported growth in factory output.

In the United States, a survey showed manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July despite a resurgence in new COVID-19 cases.

"The risk of further restrictions and lockdowns will continue to be a huge cloud of uncertainty for many industries, but after months of disruption, there may be a sense of relief at this data," said Craig Erlam, senior market analyst at OANDA Europe.

Material stocks were the biggest boosts as iron ore prices rose, followed by the healthcare sector. AstraZeneca jumped 2.8%.

The domestically-focussed FTSE 250 rose 1.3%, breaking a three-session losing streak.

A rally in UK stock markets had stalled in July as confidence in a post-pandemic economic recovery was dulled by dour corporate forecasts and fears of a second COVID-19 wave.

All eyes will be on a Bank of England policy meeting later in the week, where it is expected to shed more light on the pace of an expected economic rebound.

In results-driven moves, engineering firm Senior Plc and insurer Hiscox slumped 15.1% and 3.4%, respectively, after swinging to a first-half loss. (Reporting by Sagarika Jaisinghani in Bengaluru, Editing by Sherry Jacob-Phillips and Tom Brown )