Last checked at 
* BoE hike rates to curb inflation
* Compass group tops blue-chip index on upbeat earnings
* FTSE 100 down 0.7%, FTSE 250 off 1.3%
(Updates to market close, adds comment)
By Amal S, Tanvi Mehta and Anisha Sircar
Feb 3 (Reuters) - London's FTSE 100 erased early gains to
end lower on Thursday, as the pound jumped after the Bank of
England (BoE) announced a second consecutive interest rate hike
to curb inflation.
The FTSE 100 index dipped 0.7%, as a sharp rise in
sterling hurt shares of internationally-focused companies. The
FTSE mid-cap index fell 1.3%.
The BoE raised interest rates by 25 basis points (bps) to
0.5%, with four out of nine policymakers wanting a bigger
increase to contain rampant price pressures.
"Inflation is likely to remain elevated in the coming months
– particularly with another energy price cap hike coming in
April...," Jai Malhi, global market strategist at J.P. Morgan
Asset Management, said in a note.
"This calls into question how much the Bank has to tighten
in order to cool inflation down .... We think the central bank
can afford to be slightly more patient than the market is
pricing," Malhi stated.
The BoE said consumer price inflation - which stood at 5.4%
in December - now looked set to peak at around 7.25% in April,
which would be the highest since the recession-ravaged
early-1990s and miles off its 2% target.
"Four members voted for a 50 bps hike, which is a hawkish
turn markets did not expect," said Anna Stupnytska, a global
macro economist at Fidelity International.
"As the Fed joins the BoE in the hiking cycle later this
year, market vulnerabilities will likely come in sharp focus as
the policy punchbowl starts getting withdrawn," Stupnytska
added.
The banking sub-sector climbed 0.3%, tracking
two-year yields that jumped back to their highest
level since May 2011 following the BoE decision.
Strong quarterly earnings from companies in the energy and
consumer sector helped limit some losses.
Shares in Compass group rose 4.0% to the top of the
FTSE 100 after the catering giant said its first-quarter revenue
had reached 97% of pre-pandemic levels.
Shell was up 1.4% after it boosted its dividend and
share repurchases, and its fourth-quarter profit soared to $6.4
billion.
Gambling software maker Playtech's shares jumped
8.3% after TTB Partners sought its release from takeover rules
that prevent the shareholder from making a fresh offer for the
British company after a deal with Aristocrat collapsed.
(Reporting by Tanvi Mehta, Amal S and Medha Singh in Bengaluru
Editing by Uttaresh.V and Mark Potter)
