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Pennon Group slips on lower half-year profit

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Mining, energy stocks lead gains

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Consumer discretionary and staple stocks climb

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FTSE 100 up 0.8%, FTSE 250 off 0.1%

Nov 30 (Reuters) - UK's FTSE 100 index closed with sharp gains on Wednesday and marked its best monthly performance in two years, lifted by commodity-linked and consumer stocks on hopes of Chinese demand recovery and easing domestic political concerns.

The blue-chip index jumped 0.8%, to log its best month since Nov 2020. The domestically focused FTSE 250 midcap index closed 0.1% down. The indexes gained 6.7% and 7.1%, respectively, this month.

Energy stocks along with precious and base metal miners were up between 1.6% and 1.9%.

Mining companies like Glencore, Rio Tinto , Anglo American led the gains on the commodity-heavy FTSE 100 helped by Jefferies' optimism about the sector.

The FTSE 100 has climbed 12.9% since its Oct. 13 lows, when a bungled mini-budget sent markets into a tailspin, as new government leadership tries to restore investor confidence in the economy amid surging inflation and a severe cost-of-living crisis.

Hani Redha, portfolio manager at PineBridge Investments cites decreasing risk of energy rationing aiding views for cooling inflation.

"There is a lot of room for inflation to come down, and that's what the market is picking up on and that has positive implications for consumer discretionary."

Flutter Entertainment was among the biggest gainers in the consumer discretionary sector, up 2.2%, after JP Morgan raised the stock's price target.

Focus has turned to Jerome Powell, who speaks later in the day in what will be the U.S. Fed chief's last opportunity to steer sentiment ahead of the central bank's December meeting.

Michael Hewson, chief market analyst at CMC Markets, however says Powell's comments is not likely to have much effect on the market.

"Central bankers got it massively wrong when they said that inflation was transitory. Now they're telling us inflation is likely to remain high for quite some time. Yet all the data is pointing to inflation starting potentially peaking and starting to come down," he said.

"Various Fed officials have been quite hawkish in the past week or so, and yet bond and (equity) markets have ignored them."

Among single stocks, Pennon Group lost 2.4% after the utilities company reported a lower half-year pre-tax profit.

Shares of Rolls-Royce rose 2% after Barclays initiated coverage of the engineering company with an "overweight" rating. (Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru; Editing by Sherry Jacob-Phillips and Shailesh Kuber)