Energy stocks fuel FTSE gain

By Simon Falush

LONDON (Reuters) - The top share index closed 0.4 percent higher on Thursday, with energy stocks lifted by optimism on the economic outlook as central banks kept rates steady and U.S. data surprised on the upside.

The Bank of England kept rates steady at a record low of 0.5 percent and said it would expand its quantitative easing programme by 25 billion pounds to boost Britain's recession hit economy.

The European Central Bank also kept rates steady.

The FTSE 100 .FTSE closed up 17.75 points at 5,125.64 after gaining 1.4 percent the previous session, shaking off early weakness and tracking gains on Wall Street.

U.S. data showed a steep rise in productivity and a fall in applications for job insurance while stronger-than-forecast results from Cisco Systems (CSCO.O) also lifted the mood.

Energy stocks were the biggest support for the British index, as crude held above $80 per barrel. BG Group (BG.L), BP (BP.L), Royal Dutch Shell (RDSa.L) and Tullow Oil (TLW.L) added 0.3-1.9 percent.

British data also boosted sentiment, after manufacturing output rose faster than expected in September.

"All the data this week has been pretty good in the U.S. and the UK, so I think the correction we've seen recently is over and markets should keep moving back up over the next couple of weeks," said Graham Secker, UK equity strategist at Morgan Stanley.