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Updated at 1605 GMT

By Pranav Kashyap and Purvi Agarwal

May 31 (Reuters) -London stocks closed higher on Friday, logging a third straight month of gains, as investors cheered an in-line inflation reading from the U.S. that brought back some hopes of a September rate cut by the Federal Reserve.

The blue-chip FTSE 100 index .FTSE rose 0.5%, while the mid-cap FTSE 250 was up 0.3%. Both indexes logged a third straight month of gains, despite ending the week lower.

The much awaited U.S. personal consumption expenditure (PCE) data showed inflation rose in line with expectations in April, reviving some bets of aSeptember interest rate cut from the Fed.

Meanwhile,euro zone inflation rose in May, data showed, in a sign that the European Central Bank still faces a slow and uncertain journey to rein in prices.

Analysts predict that the Bank of England will closely align with the European Central Bank's actions to initiate the rate-cutting cycle, withthe ECB almost assured to cut rates nextweek.

"Despite the higher reading, it hasn't derailed expectations about rate cuts next week and markets still pricing in over 90% chance that we will see a cut from the ECB," said Daniela Hathorn, senior market analyst at Capital.com.

"The BoE has more pressure than the Fed in terms of needing to cut rates soon, but they're going to continue to claim independence from other central banks and just listen to the data," Hathorn added.

The utilities sector .FTUB6510 on the FTSE 350 rose 3.3% to log its best day since November 2022. Energy infrastructure operator National Grid NG.L topped the FTSE 100 with a 4.7% rise.

Amid the broader gains, the construction and materials sector .FTNMX501010 declined 0.9%, the most among sectors.

JD Sports Fashion JD.L was the top loser on the benchmark index, sliding 4.7% after the sportswear retailer kept its profit outlook unchanged.

Aston Martin AML.L ended among the top gainers of the FTSE 250 index with a 4.7% rise after a report said that it had delayed the launch of its EV until at least 2026.

Reporting by Pranav Kashyap and Purvi Agarwal in Bengaluru; Editing by Savio D'Souza and Alison Williams

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