(Reuters) -London stocks kicked off the week on a positive note, driven by gains from life insurer Prudential, although caution lingered ahead of inflation data from the United States that could set the outlook for global interest rates.

The blue-chip FTSE 100 closed 0.5% higher, touching a three-week high and hitting the psychological 8,300 mark earlier in the session.

The mid-cap FTSE 250 gained 0.6%.

Prudential also boosted the life insurance sector to a two-week high, with a 7.3% jump after it announced a $2 billion buyback plan.

This week, the UK will release its Gross Domestic Product (GDP) numbers that will provide more insight into the state of the British economy. Strong retail sales data on Friday tempered some of the optimism that followed comments from the Bank of England.

The bank kept interest rates unchanged on Thursday, and dovish comments from policymakers raised expectations of an August cut.

A domestic inflation report last week showed that headline inflation in the economy had fallen to 2% - the BoE's target.

The looming British parliamentary election, which is less than two weeks away, added to market caution.

In the U.S., investors are looking to personal consumption expenditure numbers (PCE) due on Friday for signs inflation has eased.

Among stocks on the rise, Britvic jumped 7.1% after PepsiCo agreed to waive a change of control clause in its bottling arrangements with the soft drinks maker, a move that could pave way for Carlsberg to raise its bid for the company.

The stock was the top gainer on the mid-cap index.

(Reporting by Purvi Agarwal and Pranav Kashyap in Bengaluru; Editing by Mrigank Dhaniwala and Barbara Lewis)

By Purvi Agarwal and Pranav Kashyap