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UPDATE 1-Housebuilders take FTSE 100 higher, buyout offer helps Merlin soar

Shashwat Awasthi

* FTSE 100 up 0.2%, FTSE 250 rises 0.5%

* Housebuilders jump on report of cut to stamp duty, taxes

* Trump-Xi meeting on the horizon

* Merlin rejoices after buyout offer (Adds news items, analyst comments, updates share prices)

June 28 (Reuters) - Housebuilders rose sharply on a report that Prime Minister front-runner Boris Johnson would slash stamp duty and taxes, lifting London's main index on Friday, while Madame Tussauds owner Merlin surged after a buyout offer.

The FTSE 100 rose 0.2%, while the mid-cap FTSE 250 climbed 0.5% by 0737 GMT.

Housebuilders advanced after a media report said Johnson, the leading candidate to become the next Prime Minister, plans to slash stamp duty on house sales as part of an emergency budget for a 'no-deal' Brexit.

Shares of Persimmon, Barratt, Taylor Wimpey and Berkeley jumped 2.2% to 3.3% and were the biggest gainers on the blue-chip index.

Luxury brand Burberry also rose 3% on the FTSE 100 after Goldman Sachs raised its rating on the stock.

Legoland operator Merlin Entertainments moved 14% higher to 450.1 pence on the mid-cap index after agreeing to be acquired by the investment vehicle of Lego's founding family and Blackstone in a 455 pence a share deal.

Trading was generally muted as investors were cautious and waiting for any signs of progress towards a resolution of Washington and Beijing's trade dispute ahead of talks at the G20 summit.

"Expectations are being managed though, so I would think that for Trump and Xi to agree to delay the additional tariffs and for detailed talks to resume would be sufficient to leave investors happy that things are moving," analyst Neil Wilson said.

Woodford Patient Capital Trust, whose stock has been hit recently because of its association with fund manager Neil Woodford, rose 3.5% after it laid out plans to cut debt and refresh its board.

Airtel Africa, a unit of India's Bharti Airtel , tanked more than 22% on its first day of trading. Its shares debuted on the London stock market at 77 pence, below the IPO price of 80 pence. (Additional reporting by Chris Peters and Samantha Machado in Bengaluru; Editing by Bernard Orr)