FTSE 100 gains after BoE holds rates steady, pauses gilt sales

By Reuters News

Sept 17 (Reuters) - The UK's FTSE 100 advanced on Thursday after the Bank of England held interest rates steady as expected, and said it would halt sales of long-dated gilts entirely.

The blue-chip FTSE 100 index .FTSE rose 0.58% to 10,750.50 points by 1310 GMT, while the midcap FTSE 250 .FTMC climbed 0.72%.

  • The BoE policymakers voted 6-3 to keep interest rates at 3.75%, with Governor Andrew Bailey warning explicitly that prolonged conflict in the Middle East may require tighter policy.

  • "Going forward, with inflationary concerns intensifying, the MPC will be getting increasingly uncomfortable, and no doubt hikes will be coming, most likely as soon as November", Ed Hutchings, head of rates at Aviva Investors, said.

  • Traders have fully priced in at least one quarter-point rate hike by the BOE this year, per data compiled by LSEG.

  • The central bank also paused UK government bond sales for six months and halted long-dated gilt sales entirely, days after a global bond selloff pushed 30-year borrowing costs to their highest since 1998.

  • Gilt yields fell slightly, with benchmark 10-year gilt yield falling 6 basis points to 5.243%, its lowest level in a week.

  • The BoE decision comes after the US Federal Reserve raised interest rates by 25 basis points on Wednesday and indicated one more hike in the coming months, as Chair Kevin Warsh joined a unanimous vote in favour of the move.

  • The decision follows a surge in oil prices in recent months, driven by the war in the Middle East that has stoked inflation and prompted policymakers worldwide to reassess monetary policy.

  • AstraZeneca AZN.L rose around 1% after unveiling an investment of nearly 200 million yuan ($29.81 million) to upgrade its production and supply base in Wuxi, China, the company's Chinese unit said in a statement.

  • Among mid-caps, budget carrier Wizz Air WIZZ.L climbed 4% after the airline set out medium-term financial targets, including annual revenue of €10 billion ($11.47 billion). It also raised its revenue per available seat kilometre forecast for the second quarter.

  • Construction firm Galliford Try GFRD.L advanced 6% after a 24% jump in annual profits, helped by higher project activity and disciplined cost control.

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