FTSE indexes gain after BoE holds rates steady, pauses gilt sales

Sept 17 (Reuters) - The main UK ‌indexes rose to ​their highest ​in over a week on Thursday after the Bank of England kept interest rates unchanged as expected, and said it would halt sales of ‌long-dated gilts entirely.

The blue-chip FTSE 100 index closed 1.2% higher at 10,816.14 points, ⁠while the midcap FTSE 250 climbed 1.2% to 24,352.14 points.

• 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, with the odds of a second hike rising, per data compiled by LSEG.

• Rate-sensitive ​banks rose 1.6%, with HSBC and Standard Chartered leading with gains of 2% and 2.2% respectively.

• 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 had pushed 30-year borrowing costs to their highest since 1998 at 5.96%.

• Gilts rallied sharply ⁠as yields fell on Thursday, with the 30-year gilt yield falling 11.8 basis points to 5.7414%, its lowest level in over two weeks.

• 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.

• Among single stocks, AstraZeneca rose around 2.4% 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, ⁠IT services provider Bytes Technology jumped ‌12% after the company reported ​a stronger-than-expected first-half performance and raised its full-year gross profit growth forecast.

(Reproting by Anand Gopal in Bengaluru; Editing by Janane Venkatraman, Vijay Kishore and ‌Elaine Hardcastle)

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