London stocks climb as BoE rate cut looms

Dec 15 (Reuters) - UK stocks closed higher on Monday, starting the week on a positive note ahead of a widely expected interest rate cut by the Bank of England later this week.

The UK's blue-chip FTSE 100 .FTSE closed up at 1.1%, while the midcap FTSE 250 .FTMC index added 0.7%. Both indexes ended lower for a second consecutive week on Friday.

On Thursday, traders widely expect the BoE to lower rates to 3.75% from 4.0%, marking the first reduction since August and bringing borrowing costs to a three-year low.

Governor Andrew Bailey's stance is seen as pivotal after recent data showed inflation easing to 3.6% in October, with further declines expected.

Wall Street's main indexes turned lower in afternoon trading as risk-off mood from last week returned ahead of the release of a string of delayed U.S. economic data and a slew of decisions from central banks.

Among sectors, the life insurance index .FTNMX303010 led with 2.5% gain.

Prudential PRU.L was up 3.2% after its joint venture with India's ICICI bank, ICICI Prudential Asset Management's IICL.NS $1.2 billion initial public offering was fully subscribed on the second day of bidding.

Heavyweight banks FTNMX301010 stocks firmed 1.7%.

The upbeat tone in financial stocks contrasts with looming labour market concerns, as investors brace for UK jobs data and shifting rate expectations across Europe.

The UK jobless rate is expected to rise to a 5-year high of 5.1% in October, while UK interest rates are forecast to drop.

The ECB is likely to hold rates steady with a rising chance of a hike next year.

The FTSE 100 is on pace for its best year since 2009, rising 19.3% year-to-date, outpacing the S&P 500’s .SPX 16% climb, as precious miners and financial shares have driven gains on the exchange.

Among other stocks, TT Electronics TTG.L slumped 17% after the DBAY Advisors, the biggest shareholder of TT Electronicssaid that it does not intend to make an offer for the British company, withdrawing from a possible bidding war with Swiss firm Cicor CICN.S .