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UPDATE 2-Stimulus, trade hopes lift FTSE 100; LSE at life high on Hong Kong bid

By Muvija M and Shashwat Awasthi

* FTSE 100 up 1%, FTSE 250 up 1.2%

* LSE jumps after $39 bln Hong Kong offer

* Financials lead gains for main bourse

* GMS drops after delaying results (Adds company news items, analyst comments, updates to close of trading)

By Muvija M and Shashwat Awasthi

Sept 11 (Reuters) - UK stocks advanced on Wednesday on signs of less tension in the U.S.-China trade fight and prospects of more stimulus from central banks, while shares in London Stock Exchange scaled a record high after Hong Kong Exchanges and Clearing's offer.

The FTSE 100 rose 1%, its best one-day performance in nearly ten days, while the midcap index added 1.2%.

London Stock Exchange took the top spot on the main bourse with a 6% jump after Hong Kong Exchanges and Clearing made a surprise $39 billion takeover approach, a deal that would create a global trading powerhouse.

However, the stock, which had jumped as much as 17% on the news, trimmed initial gains as investors took note of the potential regulatory hurdles and the bid being conditional on LSE ditching its $27 billion deal to buy data company Refinitiv.

"It's a bold move and one that appears to have a low chance of success," Markets.com analyst Neil Wilson wrote.

"Given the long and ignoble history of bids for LSE we think there is a very high bar to clear in order for this to succeed. Whilst HKEX already has a foothold in the UK via its ownership of the LME, the LSE is a different ball game entirely."

Asia-facing financials and mining heavyweights were among biggest boosts on the FTSE 100 after a report said China will introduce important measures to ease the negative impact of the trade war with United States.

The European Central Bank is widely expected to cut interest rates in this week's policy meeting, while the U.S. Federal Reserve is seen following suit next week as a stretch of weak economic data have stoked fears of a recession.

"I wonder whether investors have positioned themselves to be disappointed," Oanda analyst Craig Erlam said in relation to some aspects of an expected stimulus plan from the ECB.

Some news working in favour of multinational stocks was a move from China to exempt 16 types of U.S. products from additional retaliatory tariffs.

Shell, which has a secondary listing on the Amsterdam exchange, slipped 1% after a report that the Dutch government is set to get rid of certain deductions for multinational companies in 2021.

In results-driven gains, Galliford Try, which this week said it has restarted talks to sell its housing units to Bovis Homes, rose 2.4% after reporting strong margins at Linden Homes despite Brexit-induced weakness in the market.

Smaller companies recorded some sharp moves, with Capital & Regional jumping 12.2% after the company said Growthpoint Properties was in talks to buy a majority stake. Gulf Marine Services plunged 18% to a life low after delaying results. (Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Arun Koyyur, Bernard Orr and Dan Grebler)