Choppy FTSE up after Bank holds interest rates

By Michael Taylor

LONDON (Reuters) - The FTSE 100 index ended higher on Thursday as the Bank of England (BoE) held interest rates, while banks gained and consolidation activity buoyed heavyweight Vodafone.

The FTSE 100 was up 25.2 points, or 0.4 percent, at 5,995.3 and was little affected by the BoE's decision to hold rates at 5.0 percent for a second month running, as the central bank balanced the risk of a sharp economic slowdown against the threat of high inflation shooting up further.

Beaten-down banks recovered some of their recent losses, with Barclays, Royal Bank of Scotland and HBOS up between 3.1 and 5.1 percent despite the latest weak house price data adding to the sector's woes.

A rating upgrade from Citigroup also helped lift RBS before the latter's rights issue deadline on Friday.

"Having started the week with 6,000 providing some solid support for the FTSE, this now seems to be acting as a resistance level and the London index is now entrenched below the line," said David Fineberg, a dealer at CMC Markets.

"Resource stocks remain under pressure amidst falling commodity prices and although the rate announcements earlier this afternoon were of no surprise at all, the prospect of strong cash yields being maintained is certainly going to add to the general scepticism around equities."

In commodities, U.S. crude rose to over $123 a barrel and supported oil shares, with BP and Shell advancing 0.3-1.3 percent.

Among individual high flyers, shares in mobile phone giant Vodafone gained 3.8 percent following the announcement that Verizon Wireless, in which Vodafone holds 45 percent, had agreed to acquire Alltel for $28.1 billion.