LONDON MARKETS: Barclays Leads U.K. Stocks To First Gain In Three Days

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- U.K. stocks closed higher for the first time in three days on Thursday, with Barclays leading advancers after a strategy update. The benchmark index also stayed higher after the Bank of England left policy on hold as expected.

The FTSE 100 index picked up 0.6% to end at 6,839.25, its highest close since late February.

Shares of Barclays (BCS) topped the list of gainers, rising 7.9% after the U.K. bank presented its strategy update. Barclays plans to ax 7,000 jobs at its investment bank by 2016 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 1.7% and Standard Chartered PLC rising 2%. Sector heavyweight HSBC Holdings PLC (HSBC) slipped 0.5%, adding to a 1.3% loss from Wednesday when the bank reported a fall in profit and revenue for the first quarter.

Also in focus in London, the Bank of England left its key lending rate at a record low of 0.5% and made no changes to its 375 billion pound ($635.8 billion) asset-purchase program. The decision was widely expected as policy makers have signaled they won't raise rates until the remaining slack in the economy has been absorbed.

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.

"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.

The European Central Bank was also in the spotlight on Thursday after President Mario Draghi said the central bank is "comfortable with acting" at the June meeting albeit with the caveat that policy makers want to see the June update to staff economic forecasts. The ECB kept policy steady at the meeting on Thursday, defying pressure to loosen policy to fight low inflation and a strong euro.

Among other movers in London, shares of BT Group PLC (BT) picked up 2.9% 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 5.3% 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.

More must-reads from MarketWatch:

The next banking crisis is already in the making

Monica Lewinsky: Clintons did not buy her silence

Only 4 Teslas have ever been stolen in U.S.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires