Bank of England keeps rates on hold
UK pay growth steady in the three months to January
3i falls due to ERP system issues affecting sales
FTSE 100 flat, FTSE 250 down 0.1%
Updates after market close
March 20 (Reuters) - The FTSE 100 closed little changed on Thursday, after the Bank of England kept interest rates unchanged and warned against expectations of future cuts given an increasingly uncertain economic outlook.
The blue-chip FTSE 100 .FTSE was flat, and the midcap FTSE 250 index .FTMC slipped 0.1%.
The BoE held interest rates at 4.5% as expected, but warned against assumptions on future rate cuts. Policymakers cited an uncertain growth outlook given escalating trade tensions between the U.S. and other global economies.
The Monetary Policy Committee voted 8-1 to keep rates on hold, with only external member Swati Dhingra voting for a quarter-point cut.
"Today's vote split and the minutes were hawkish, we think, and the near-term risks are skewed hawkishly too," said Morgan Stanley.
"We expect the next cut in May, but the near-term path looks very bumpy."
The BoE decision follows Federal Reserve Chair Jerome Powell's comments that the central bank is not rushing to cut rates due to the impact on growth and inflation from U.S. President Donald Trump's trade policies.
Banks .FTNMX301010 shed 1.3%, mirroring a fall in UK government bond yields. GVD/EUR
HSBC Holdings HSBA.L lost 2.2%. A report said the bank is in advanced talks to sell its German fund administration business to BlackFin Capital Partners.
Data showed that British pay growth was little changed in the three months to January.
A separate survey showed the British public's expectations for short-term inflation hit their highest level in more than a year in February.
Leading sectoral declines, defence .FTNMX502010 stocks fell 2%, as did European defense shares, with an analyst pointing to profit-taking after strong gains.
Compass Group CPG.L fell 3.7% after Sodexo's forecast cut.
3i Group III.L slipped 3.3% after the investment firm reported its portfolio company Action's year-to-date like-for-like sales.
Wealth Manager Investec INVP.L fell 5.4%, dragging down the midcap index, after its annual profit forecast disappointed investors.
(Reporting by Ragini Mathur and Sanchayaita Roy in Bengaluru; Editing by Sonia Cheema and Rod Nickel)
((Ragini.Mathur@thomsonreuters.com;))
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