UPDATE 2-Stronger pound weighs on FTSE 100 after BoE lays plans for eventual tightening

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* Rolls-Royce jumps on positive earnings outlook

* Ad firm WPP gains on strong sales

* FTSE 100 down 0.1%, FTSE 250 adds 0.7%
(Updates to close)

By Shashank Nayar

Aug 5 (Reuters) - A strengthening pound weighed on Britain's
export-heavy FTSE 100 on Thursday, as the Bank of England sent a
clear message of how it plans to rein in its stimulus, when the
time comes.
Rolls-Royce, however, outperformed, jumping 5.9% to a
more-than-one-month high after the engine maker said it was on
track to meet its forecasts for this year as cost cuts and asset
sales help it weather a slow recovery in long-haul travel.

The FTSE 100 ended the day down 0.1%. Mining and
consumer staples stocks logged the biggest declines as the Bank
of England said it could see a modest reduction ahead in its
massive stimulus, sending the pound higher against the dollar,
although the UK currency later gave up some gains.

The FTSE 100 has gained about 10% this year on support from
dovish central bank policies, but gains have slowed as investors
fret about the longevity of such policies given rising
inflation.

The Bank of England on Thursday kept its benchmark interest
rate unchanged but said that inflation was now on course to rise
even further above its 2% target, although it reiterated that
higher prices would be temporary.

"Central banks are sticking to their view that the current
price rises are 'transitory' ... but not everyone is so sanguine
as some market strategists look to the classic cycle of higher
commodity prices, higher factory gate prices, higher consumer
prices and higher wages as a harbinger of inflation," AJ Bell
investment director Russ Mould said.

The mid-cap FTSE 250 rose 0.7%, boosted by a 26.2%
jump in shares of Cairn Energy after the Indian
government proposed refunding companies involved in disputes
over past tax payments, aiming to settle long-running
litigation.

Blue chip Lloyd's Banking Group fell 3% after
Goldman Sachs downgraded its stock to "sell".

Among other stocks, WPP, the world's biggest
advertising company, rose 2.7% after saying its underlying net
sales jumped 19.3% in the second quarter.
(Reporting by Shashank Nayar and Sagarika Jaisinghani in
Bengaluru; Editing by Amy Caren Daniel and Susan Fenton)