(Reuters) -London stocks gained 1% on Monday, following last week's sharp selloff, as fears of the Middle East crisis escalating eased and investors looked ahead to domestic and U.S. economic data later in the week.

The benchmark FTSE 100 rose 1.1% as of 0826 GMT, while the mid-cap FTSE 250 gained 0.8%. Both indexes are set for the biggest percentage gain in a month.

Tyman led gains in the construction sector after it surged 29% on a $976 million buyout deal by Quanex Building Products. The index was also the top gainer with a nearly 3% jump.

The energy sector was up by 0.7% despite oil prices falling by more than 1%. Precious metal miners was the only sector in the red, slipping 1.2% as gold prices eased after Iran downplayed the risks of an escalation. [GOL/]

Markets will be focussed on comments from Bank of England's Chief Economist Huw Pill on Tuesday for hints on future rate cuts and the manufacturing and services data for performance of the UK economy.

U.S. personal consumption expenditure price index data is due on Friday.

"All eyes this week are on the latest expectations for the United States and just how stubborn inflation is expected to stay," Susannah Streeter, head of money and markets at Hargreaves Lansdown said.

Shares of Marks & Spencer Group jumped nearly 3% after Jefferies raised the stock to "Buy" from "Hold" earlier.

Hipgnosis Songs Fund boosted the midcap index with a 10.3% gain as Blackstone made a potential offer to buy the company that owns rights to music by artists including Shakira and Red Hot Chilli Peppers for about $1.5 billion.

Chill Brands fell nearly 24% after the vape-maker suspended CEO Callum Sommerton after allegations were raised around the company's use of inside information.

Meanwhile, an industry survey showed that prices of homes being sold in Britain are close to their record highs after the biggest annual increase in a year.

(Reporting by Pranav Kashyap and Shubham Batra in Bengaluru; Editing by Mrigank Dhaniwala)

By Pranav Kashyap and Shubham Batra