March 7, 2013 / 8:21 AM / in 5 years

Defensives lead FTSE 100 higher ahead of BoE rate decision

LONDON, March 7 (Reuters) - Britain’s top share index rose early on Thursday in cautious trade, led by defensives such as consumer staples ahead the Bank of England policy announcement, with financials mixed after Aviva slashed dividends.

By 0816 GMT, London’s blue chip index was up 18.18 points, or 0.3 percent, to 6,445.82, taking their cue from strength overnight in the U.S., where the Dow Jones Industrial Average ended at another record high after some positive job figures.

Consumer staples such as Unilever and Reckit Benckiser were among the top gainers as Credit Suisse argued the sector was not expensive and raised target prices on names under its coverage by up to 20 percent.

Gains, however, were cautious with the Bank of England expected to hold interest rates at a record low 0.5 percent at 1200 GMT, although chances are rising that the BoE will decide to start buying assets again to support a weak economy.

The big news was life insurer Aviva, which tumbled 14.4 percent after it cut its dividend by over a quarter to provide extra funds for a turnaround strategy aimed at bolstering capital and profit. (Reporting by David Brett; Editing by Toni Vorobyova)

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