Sterling pares losses, traders brace for BoE

* Sterling slides, traders await BoE, QE in focus * Pound pares losses after strong UK manufacturing data * Traders: BoE may up QE or signal end

By Naomi Tajitsu

LONDON, Nov 5 (Reuters) - Sterling slipped as traders waited to see whether the Bank of England will announce an increase in its quantitative easing programme when it ends a policy meeting later on Thursday.

Data showing a big rise in UK factory output helped the pound trim losses in thin trade, but traders said few in the market were taking on big sterling bets before the BoE decision.

The BoE will issue its policy statement at 1200 GMT. It is widely seen holding interest rates at a record low 0.5 percent. However, the focus will be on whether the bank extends its 175 billion pound to buy UK assets to increase market liquidity and boost lending.

Traders speculated whether the BoE would extend quantitative easing by 25 billion pounds or 50 billion pounds or even call a halt. Any increase would probably result in a sell-off in sterling, at least initially, they said. "The market will be square (on its sterling positions), maybe slightly short going into the meeting," said a trader based in London.

He said the market's main scenario was for a 25 billion increase while signalling the increase would be the last.

Sterling has suffered all year, dropping nearly 13 percent against the dollar, as the BoE has pumped a staggering amount of funds into the UK market to resuscitate the economy. Several other central banks are seen to have ended stimulus measures and some have even started to raise rates.