London stocks rise as Fed cuts rates, unmoved by BoE hold

By Shashwat Chauhan

Sept 18 (Reuters) - London stocks closed higher on Thursday in line with gains seen across Europe after the U.S. Federal Reserve cut interest rates for the first time this year, reacting little to the Bank of England's decision to hold its rates steady.

The blue-chip FTSE 100 .FTSE closed 0.2% higher, with gains in business information group RELX REL.L and aircraft engine maker Rolls-Royce RR.L among the top boosts.

Britain's central bank kept its main rate on hold at 4% after last month's quarter-percentage-point cut and nudged up its economic growth forecast for the third quarter.

"In terms of the policy outlook, this meeting offered little new direction," said Stefan Koopman, senior macro strategist at Rabobank.

"We think that a material downside surprise (in inflation) would be required to justify a cut before year-end. The odds of that happening are not particularly great."

Data earlier this week showed British inflation in August was the highest among major advanced economies.

Yields on the 10-year GB10YT=RR and 30-year GB30YT=RR gilts rose modestly, while the pound GBP= shed 0.6% against the dollar.

Stocks across Europe gained after the Fed reduced interest rates by an expected 25 basis points and indicated more cuts would follow to halt any slide in an already weakening labour market.

The chemicals sub-index .FTNMX552010 was among the top gainers in London, while precious metal miners .FTNMX551030 were the laggards.

UK's midcap index .FTMC also climbed 0.5%, helped by a 12% gain in Jupiter Fund Management JUP.L after brokerage Peel Hunt upgraded its rating on the money manager to "buy" from "add".

Pets at Home PETSP.L slid 15.5% after the retailer said its CEO has left the company and cut its annual profit estimates.

Next NXT.L shed 3.5% after the fashion retailer struck a cautious tone on the trading outlook, despite reporting a near 14% increase in first-half profit.

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