UPDATE 2-Commodity, bank stocks lead FTSE 100 higher; Playtech drops

* Oil and banking shares top gainers

* Wizz Air reports Q3 loss, expects improvement in spring

* FTSE 100 up 1.3%, FTSE 250 add 1.1%
(Updates to market close)

By Shashank Nayar and Ambar Warrick

Jan 26 (Reuters) - London's FTSE 100 rose on Wednesday with
heavyweight mining, energy and banking shares leading gains
before the outcome of a U.S. Federal Reserve meeting, while
Playtech dropped on reports of a potential breakup.

The blue-chip FTSE 100 rose 1.3% with Royal Dutch
Shell, Glencore and HSBC Holdings the
top boosts to the index.

The banking sub-index rose 2.6%, tracking
higher yields. Expectations of rising interest rates have
boosted bank stocks this year.

Global shares steadied after sharp losses earlier this week
as investors awaited any hints about faster tightening of
monetary policy from the Fed later in the day.

The FTSE 100 has gained 1.3% so far this year, significantly
outperforming a 4.4% drop in the wider European stock aggregate
, helped by cheap valuations, strong banking and energy
gains and a lower exposure to technology stocks.

"There is a lot of global rotation out of growth into value
stocks and the FTSE 100 is full of value stocks and that is one
of the key reasons why the FTSE has outperformed and we expect
this trend to carry on," said Keith Temperton, sales trader at
Forte Securities.

The domestically focussed mid-cap index was up 1.1%
with travel and leisure stocks leading gains.

Britain's Pets At Home jumped 2.7% after the pet
supplies retailer raised its profit outlook for fiscal
2022.

Hungary-based carrier Wizz Air fell 0.2% after it
posted a third-quarter operating loss and said the fourth
quarter loss was likely to be slightly higher, before an
expected improvement in spring.

Gambling software maker Playtech fell 6.9% and was
among the worst performers on the mid-cap index after it once
again backed a buyout by Aristocrat Leisure, following
a report that the London-listed company was exploring a breakup
if the deal does not go through.

(Reporting by Shashank Nayar in Bengaluru; Editing by Shailesh
Kuber and Jonathan Oatis)