* FTSE 100 up 0.6 pct
* Blue chips, mid caps hit record highs
* U.S. Fed raises rates, but pace will be gradual
* Miners biggest gainers on dollar weakness
(Adds details, closing prices)
By Danilo Masoni and Kit Rees
LONDON, March 16 UK shares rose to new record
highs on Thursday, helped by a surge in commodities-related
stocks, but pared some gains after a Bank of England (BoE)
policymaker voted for a rate hike.
The blue chip FTSE 100 index rose 0.6 percent, still
ending at its highest level on record, while mid caps
gained 0.3 percent, ending below the all-time high hit during
Both indexes pared some gains after outgoing BoE policymaker
Kristin Forbes unexpectedly voted for a rise in interest rates
and others signalled it would not take much for them to follow
"The fact that some members of the MPC (BoE's Monetary
Policy Committee) may be inclined to agree with Forbes suggests
a hawkish tilt that few were expecting," said Neil Wilson,
market analyst at ETX Capital.
British stocks joined in a broader rally among major
European indexes, which gained after Dutch Prime Minister Mark
Rutte won an election victory in the Netherlands, fighting off a
challenge from far-right rival Geert Wilders.
Likewise, an indication from the U.S. Federal Reserve that
there would be no pick-up in the pace of monetary tightening
after a widely expected rate hike on Wednesday also helped by
sending the dollar lower.
Mining stocks in particular were boosted by a
weaker dollar, which makes the underlying commodity cheaper for
holders of foreign currency.
Mining stocks rose 4.2 percent and added the most to the
FTSE 100, around 22 points, followed by energy stocks
. which added around 10 points. Royal Dutch Shell
and BP rose 1 percent and 0.7 percent
Shares in Anglo American surged 8.6 percent after
Indian billionaire Anil Agarwal said he would buy a stake of up
to 2 billion pounds ($2.5 billion) in the global miner.
Precious metals miners Fresnillo, Polymetal
International and Randgold Resources were
particularly in demand after the U.S. Federal Reserve's more
dovish tone, saying it would stick to a gradual path of interest
"Precious metals ... have suffered from the more aggressive
interest rate outlook," Yuen Low, analyst at Shore Capital,
said. "For as long as the Fed continues to emphasise a gradual
raising of interest rates, we expect interest rate hikes to lag
inflation growth, resulting in an interest rate-inflation
‘differential’ that should be mildly positive for precious
Among the fallers, companies trading ex-dividend weighed,
with Direct Line down 3.6 percent.
Likewise, a number of ratings downgrades also put pressure
on stocks, with drugmaker Hikma down 4.7 percent after
JP Morgan cut the stock to "neutral" from "overweight", and
Merlin Entertainments down 2.9 percent following a
Berenberg downgrade to "sell" from "hold".
(Reporting by Danilo Masoni and Kit Rees; Editing by Alison
Williams and Mark Potter)