LONDON MARKETS: Barclays Leads U.K. Stocks Higher; BOE In Focus

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- U.K. stocks headed for their first rise in three days on Thursday, with Barclays leading advancers after a strategy update. Investors are also waiting for the latest policy decision from the Bank of England.

The FTSE 100 index picked up 0.5% to 6,828.32, on track for its highest close since late February.

Shares of Barclays (BCS) topped the list of gainers, rising 5.6% after the U.K. bank presented its strategy update. Barclays plans to ax 7,000 jobs at its investment bank over the next two years and to create a "bad bank" division consisting of 115 billion pounds ($195 billion) of risk-weighted assets.

Other banks were also higher, with shares of Royal Bank of Scotland Group PLC (RBS) up 2% and Lloyds Banking Group PLC (LYG) rising 0.7%. Sector heavyweight HSBC Holdings PLC (HSBC) slipped 0.3%, adding to a 1.3% loss from Wednesday when the bank reported a fall in profit and revenue for the first quarter.

At noon in London, or 7 a.m. Eastern Time, the Bank of England will release its latest monetary-policy decision. Most economists expect the central bank to keep interest rates at a record low of 0.5% and make no changes to its 375 billion pound ($635.8 billion) asset-purchase program.

Since the last BOE meeting, the U.K. unemployment rate has dropped below 7%, which -- according to the bank's initial forward-guidance framework from August -- was the threshold for policy makers to consider raising interest rates. However, in February the BOE introduced an updated interest-rate framework and said it would focus on a wider range of economic indicators rather than just the joblessness rate. Most economists now expect the first 25-basis-point rate hike to come in 2015.

"The inflation report next week will be much more interesting, as it could signal a shift towards an earlier rate hike, in light of the recent strong data," analysts at Danske Bank said in a note. The U.K. inflation report is scheduled for publication on Wednesday.

Among other movers in London, shares of BT Group PLC (BT) picked up 2.7% after the telecom company posted a rise in fourth-quarter profit despite lower revenue, as its sports TV channels boosted business.

On a more downbeat note, shares of Sage Group PLC slid 5.4% after the software firm said Chief Executive Guy Berruyer will retire, leaving no later than March 31, 2015. The company said it swung to a pretax profit in the half year ended March 31.

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