FTSE gains as UK interest rates kept at 0.5%

The London market was higher today after the Bank of England held interest rates and industrial production figures revealed a bounceback in activity.

Interest rates in the UK have now been at 0.5% for 28 consecutive months reflecting the concern over the underlying strength of Britain's economy - but the move was widely expected.

The FTSE 100 Index was 23.6 points higher at 6027.5 with sentiment lifted by a positive session on Wall Street, in spite of renewed concerns over the health of the eurozone after Moody's rating agency downgrading Portugal's debt to junk status.

The move overshadowed the recently improved outlook for Greece's economy and shook the banking sector. Lloyds Banking Group drifted 0.1p lower at 47.6p.

Another faller was satellite broadcaster BSkyB as calls grow for its proposed takeover by News Corp to be delayed until enquiries into the News of the World phone hacking scandal are completed. The shares dropped 10p to 817p.

The manufacturing sector recorded its biggest rise in production for more than a year as it bounced back from the disruption caused by bank holidays around the royal wedding and Easter, according to the Office for National Statistics (ONS).

Heavily-weighted mining stocks provided the most support amid mainly higher base metals prices with copper giants Antofagasta and Kazakhmys up 27p at 1464p and 21p at 1384p respectively.

Investment manager Man Group topped the risers' board after it cheered the market with a strong quarterly update. Shares were up 6.2p at 253.1p.

Away from the FTSE 100, there was a sharp fall for component distributor Premier Farnell, which warned second quarter sales would be below expectations due to slow demand in Europe and North America something that will also have a knock-on effect on annual profits. The shares crashed 22% to 188.3p.

Retail chain Dunelm rose to the top of the FTSE 250 risers as it bucked the gloom engulfing the retail sector after reporting a surge in sales.

The group, which runs more than 100 stores selling items such as kitchenware, bedding and rugs, said total group sales were up 11% in the 13 weeks to July 2, while like-for-like sales grew by 1.9%. The shares rose by nearly 9% to 441.1p.