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FTSE 100 up 1%, FTSE 250 up 1.4%

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Barclays ( BCS ) gains on share buyback

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Inflation rate below BoE expectations

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ITV falls after largest shareholder reduces stake

(Updates after markets close)

Oct 22 (Reuters) - London stocks rose for a third

straight day on Wednesday as investors ramped up bets on

interest rate cuts from the Bank of England after data showed

that inflation had unexpectedly held steady.

British lender Barclays ( BCS ) advanced 5% among the top

movers on the FTSE 100 index after announcing a surprise 500

million-pound ($670 million) share buyback and upgrading a key

profitability target for the year. This boosted the bank's index

by 1.5%.

Inflation for the month of September was held at 3.8%, below

the Bank of England's estimates of 4%, and raising bets on a

rate cut this year. Traders see a roughly 75% chance that the

BoE's Monetary Policy Committee will cut the bank rate to 3.75%

from 4% at its December meeting.

That was up from about a 46% chance before the data,

which "could give the central bank the confidence to carry out

one more rate cut most likely in December, which would be

another win for the government", said Victoria Scholar, head of

investment at Interactive Investor.

The data also brought much-needed relief ahead of the

November budget for finance minister Rachel Reeves, who along

with BoE policymakers has been trying to navigate through sticky

inflation and slow economic growth.

The blue-chip FTSE 100 gained 1%, while the mid-cap

focused FTSE 250 advanced 1.4%.

Oil majors BP and Shell gained 1.8% and

1.7%, respectively, as oil prices edged higher.

Among individual stocks, Rio Tinto advanced 2.1%

after sources said the miner explored a potential

asset-for-equity swap with Chinalco which would trim the Chinese

investor's 11% stake. That would help the company to resume

buybacks and pursue new strategic deals.

On the flip side, ITV shares slid 7.8% after the

broadcaster said its largest shareholder Liberty Global ( LBTYA )

reduced its stake to 5% from 10% in the company. The

stock was the worst performer in the FTSE 250.

($1 = 0.7451 pounds)