August 13, 2014 / 11:01 AM / in 3 years

Britain's FTSE boosted by dovish BoE, G4S numbers

* FTSE 100 up 0.4 pct as BoE delivers dovish message

* Banks, utilities up as rate hike expectations pushed back

* Strong emerging markets, North America results lift G4S

By Francesco Canepa

LONDON, Aug 13 (Reuters) - Britain’s top share index rose on Wednesday, boosted by strong results from security firm G4S and expectations that interest rate in the country would stay low for longer.

Traders welcomed a dovish message from the Bank of England, which slashed its wage growth forecasts and said this metric would be key to determining the timing and pace of interest rate rises.

With low bond yields fuelling demand for equities and 75 percent of revenues from UK blue chips coming from overseas, the BoE’s move has a silver lining for London-listed companies, which benefit from a weaker sterling and low interest rates.

“It’s positive for the market, I‘m sure, but it could allow inflation to come in which is harder to control in the medium term,” 4-Shires Asset Management managing director Jeremy Le Sueur said.

“For exporters the pound needs to be a lot lower. Domestic bond-like plays such as utilities are going to benefit if we are going to have interest rates lower for longer.”

Utilies Severn Trent and United Utilities, and domestically focussed banks Royal Bank of Scotland and Barclays all rose more than 1 percent.

The FTSE 100 extended gains after the Bank of England’s report to trade 28.56 points higher, or 0.4 percent, at 6,660.98 points by 1046 GMT.

Shares in G4S were among top risers, up 2.4 percent, after the group posted a better-than-expected rise in first-half operating profit, with revenue growth in emerging markets and North America offsetting a decline in Europe.

Trading volume in the stock was almost 20 percent higher than its full-day average for the past three months, compared to market volume of about a quarter of the FTSE 100’s own average.

Stocks trading without their dividend entitlements - including heavyweights such as pharma group AstraZeneca, oil major Royal Dutch Shell and miner Rio Tinto - capped gains on the FTSE, shaving about 21 points off the index.

Motor insurer Admiral Group was among the biggest losers, down 4.5 percent after posting first-half results.

Shore Capital repeated its “sell” rating on the stock following the numbers, which it said were lower than its forecasts.

The FTSE 100 hit a peak of 6,894.88 points in mid-May, which marked its highest level since December 1999 but it has since retreated.

Fears of economic fallout from wars in Ukraine and Iraq have added to worries about a tightening of monetary policy in Britain and the United States while the economic recovery remains fragile.

“I think people are just worried that we’re going to drift down,” ETX Capital head of trading Joe Rundle said. (Additional reporting by Tricia Wright; Editing by Louise Ireland)

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