UPDATE 2-Housebuilders lead FTSE 100 rise, buyout offer helps Merlin soar

* FTSE 100 up 0.3%, FTSE 250 rises 0.8%

* Housebuilders jump on report of cut to stamp duty, taxes

* Trump-Xi meeting on the horizon

* Pound strength aids mid-caps

* Merlin rejoices after buyout offer (Adds news items, updates to closing prices)

By Shashwat Awasthi

June 28 (Reuters) - A report that prime minister front-runner Boris Johnson would slash stamp duty and taxes drove gains in housebuilders and lifted London's main index on Friday, while Madame Tussauds owner Merlin surged after a buyout offer.

The FTSE 100 rose 0.2%, while the FTSE 250 capitalised on a stronger pound to climb 0.8%.

Housebuilders advanced after a media report said Johnson, the leading candidate to succeed Theresa May as prime minister, plans to cut stamp duty on house sales as part of an emergency budget for a "no-deal" Brexit.

Shares of Persimmon, Barratt, Taylor Wimpey and Berkeley jumped 1.5% to 4.2% and were among the biggest gainers on the blue-chip index.

Trading was generally muted and investors were cautious with the focus on President Donald Trump's meeting with Xi Jinping at the G20 summit this weekend, which could dictate the course of the U.S.-Chinese trade dispute as well as global markets.

"Expectations are being managed though, so I would think that for Trump and Xi to agree to delay the additional tariffs and for detailed talks to resume would be sufficient to leave investors happy that things are moving," Markets.com analyst Neil Wilson said.

Still, bets that the U.S. Federal Reserve would cut interest rates guided the FTSE 100 to its best month since January, counteracting effects of U.S. sanctions on Iran and uncertainty ahead of the Trump-Xi showpiece.

Luxury brand Burberry gained 4.1% after Goldman Sachs raised its rating on the stock.

Shares of Glencore, which slipped nearly 5% in the previous session after its mine collapsed in Congo, recovered most of those losses and added 4.2%. The miner confirmed the accident would not impact production.

Legoland operator Merlin Entertainments moved 14% higher on the mid-cap index after agreeing to be acquired by the investment vehicle of Lego's founding family and Blackstone in a 455-pence-a-share deal.

Woodford Patient Capital Trust, whose stock has been hammered recently because of its association with fund manager Neil Woodford, shed 2.6%. Shares had earlier gained 3.5% after the firm laid out plans to cut debt and refresh its board.

Airtel Africa, a unit of India's Bharti Airtel , tanked nearly 25% on its first day of trading. Its shares debuted on the London stock market at 77 pence, below the IPO price of 80 pence. (Additional reporting by Chris Peters and Samantha Machado in Bengaluru; Editing by Bernard Orr/Mark Heinrich)