S&P ups UK outlook to stable, affirms AAA rating

LONDON Oct 26 (Reuters) - Credit ratings agency Standard & Poor's lifted its outlook for Britain's triple-A sovereign debt to 'stable' from 'negative' on Tuesday in a vote of confidence for the government's fiscal austerity programme.

"The decisions reached by the United Kingdom coalition government ... reduce risks to the government's implementation of its June 2010 fiscal consolidation programme," S&P said in a statement.

Finance minister George Osborne detailed plans last week that will chop almost 20 percent from the budgets of most government departments over the next four years, as well as reducing welfare payments.

Britain's budget deficit hit 11 percent of GDP last year, but Osborne's June emergency budget set out measures to reduce this to almost zero over the coming years.

Gilt futures prices FLGZ0 bounced off a session low following the news, having earlier suffered after third-quarter GDP data showed a much smaller slowdown than most economists had expected, while sterling extended its rally.

(Reporting by David Milliken; Editing by John Stonestreet)