UPDATE 2-FTSE 100 marks best week in 4 months; buyout offer lifts Millennium & Copthorne

* FTSE 100 up 1%; FTSE 250 up 0.9%

* Disappointing U.S. jobs data raises rate cut hopes

* Millennium & Copthorne surges after buyout offer

* Ferrexpo rises after H1 forecast (Adds company news items, updates to closing prices)

By Muvija M

June 7 (Reuters) - Expectations of an interest rate cut after disappointing U.S. jobs data fuelled a rally in UK shares, helping London's FTSE 100 rise for the fifth straight session on Friday, while Millennium & Copthorne Hotels gained one-third in value after a takeover bid.

The FTSE 100 index rose 1% and the FTSE 250 midcap index advanced 0.9%, with gains across all sectors.

After the European Central Bank on Thursday disappointed some with its moves towards policy stimulus, investors were hopeful of an interest rate cut by the Federal Reserve in the near future following a weaker-than-expected U.S. employment report.

"Investors now expect any confirmed economic downturn to be salved by easing," Ken Odeluga, City Index analyst, said.

The prospect of more stimulus on both sides of the Atlantic has been at the heart of gains this week that helped the FTSE 100 record its best week in four months, easing fears of a global slide into recession.

Signs of a softening in U.S.-Mexico trade tensions and Washington granting Chinese exporters more time before increasing tariffs also boosted sentiment.

Tobacco stocks and consumer giants, considered safer bets at times of macro-economic uncertainties, were still in demand, in a sign of the continuing nerves over global growth that have dominated markets since the start of May.

British American Tobacco jumped 3.4%, leading gains on the main index.

Among midcaps, Millennium & Copthorne Hotels surged 35% to 680 pence, nearly matching the 685 pence a share offered for the company by Singapore-listed real estate firm City Developments.

Ferrexpo jumped nearly 8% after saying it expected first-half core earnings to rise "materially" on the back of higher pricing, production and sales volumes. Stock ended 4% higher.

Fantasy miniatures maker Games Workshop rose 5% after it pointed to a rise in annual earnings year-on-year and stuck to its targets.

Construction firm Kier Group, whose shares plunged by 40% earlier in the week after a profit warning, added 7.2%.

Among a handful of losers was Royal Mail, which fell 4% after HSBC cut its rating for Britain's former postal monopoly to "Hold".

Its shares had tumbled to a record low earlier this week when Jefferies analysts said the risk of state-ownership was likely to keep potential investors on the sidelines.

Housebuilders and other domestically-focused stocks including regional airlines, considered most exposed to an economic hit from a hard Brexit, did not budge after British Prime Minister Theresa May officially stepped down as leader of the governing Conservatives after failing to deliver on Brexit. (Reporting by Muvija M in Bengaluru; editing by Patrick Graham, William Maclean)