Sterling rises, short sterling falls after BoE minutes

LONDON, July 23 (Reuters) - Sterling rose on Wednesday and short sterling rate futures fell after minutes released from the Bank of England's policy meeting showed a three-way split between board members on interest rates.

Minutes of the July 9-10 policy meeting showed arch hawk Timothy Besley wanting an immediate, credibility-boosting quarter-point hike to 5.25 percent and dove David Blanchflower arguing a cut was needed to prevent a recession [nBOE001484].

The BoE held rates at 5 percent this month.

Sterling <GBP=> rose to a session high of $1.9946 after the announcement, as few in the market had been expecting the call for the rate hike.

The euro <EURGBP=> slipped to a three-week low of 78.97 pence.

Gilts and short sterling rate futures fell after the minutes were released. September Gilts FLGU8 hit a session low of 105.30 and were last 37 ticks lower at 105.40.

Short sterling futures <0#FSS:> were up to 8 ticks lower across the 2009 strip.

Britain's FTSE 100 .FTSE pared gains, but still traded 1.3 percent higher on the day.

(Reporting by London markets team)