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FTSE 100 down 0.5%, FTSE 250 slumps 2.4%

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BoE could deliver "significant policy response" in Nov

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Saga cuts profit forecast on inflationary woes

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Biffa to be taken over in bln $1.4 bln deal

Sept 27 (Reuters) -

London stocks fell on Tuesday as worries about potential central bank tightening to support a hammered pound knocked risk appetite, with the mid-cap index dropping 2.4% in its fourth straight session of declines.

The BoE is likely to deliver a "significant policy response" to last week's announcement of sweeping tax cuts by finance minister Kwasi Kwarteng but it should wait until its next meeting in November before making its move, BoE Chief Economist Huw Pill said on Tuesday.

After the pound fell to record lows on Monday, expectations had risen about an emergency intervention from the central bank.

As the pound recovered, the blue-chip FTSE 100 slipped 0.5%, while the domestically focused midcap index FTSE 250 hit its lowest since November 2020.

Energy and mining stocks advanced, tracking oil and metal prices higher, but they were offset by losses in bank and defensive stocks.

"The FTSE 250 index is obviously suffering as it is exposed to the domestic economy. You're seeing stocks that make their money in sterling at home suffer on rising interest rate scenario," said Keith Temperton, sales trader at Forte Securities.

"I don't expect an emergency hike by the BoE unless sterling (continues to) have a massive downshift."

"It's very difficult to tame inflation when you've got a government that wants to go and spend money and cut taxes," he said pointing to a steeper inversion curve in UK bond markets signalling long term inflation problems.

Biffa Plc surged 27.8% after the waste management company agreed to be taken over by private equity firm Energy Capital Partners in a 1.3-billion-pound ($1.41 billion) deal.

Burberry Group gained 1.7% after rating agency Moody's changed its outlook on the company to "positive" from "stable".

Saga Plc plunged 24.1% after it cut its full-year profit forecast and reported a first-half loss.

(Reporting by Johann M Cherian in Bengaluru; Editing by Subhranshu Sahu, Saumyadeb Chakrabarty and Alison Williams)