By Atul Prakash and Ahmed Aboulenein
LONDON (Reuters) - The FTSE rose on Wednesday after the Bank of England said it will only start to raise interest rates in about a year's time, confirming market expectations.
The Bank cut its growth forecasts for British economic growth over the next three years, which hit sterling but gave equities a lift, with investors betting on the low interest rate environment that has sent the FTSE 100 index to record highs this year.
"It has really pushed back the prospect for interest rate increases," Brewin Dolphin head of research, Guy Foster, said.
"Effectively they are saying interest rates probably aren't rising in 2015 which seems a very bold call given the pickup in wage data reported an hour earlier, but I think that is what is pushing the market at the moment."
The blue-chip FTSE 100 (FTSE) was up 0.6 percent at 6,977.31 points by 1111 London time after falling 1.4 percent in the previous session. It is up about 6 percent so far this year.
Mondi (LONDON:MNDI) shares rose more than 10 percent, to be the top FTSE 100 gainer, after the company said first quarter underlying operating profit was 29 percent above the comparable 2014 period.
"Average paper selling prices holding up and comparable sales growth across most business, both sequentially and annually, is also welcome news at this stage of the year," Accendo Markets' head of research, Mike van Dulken, said.
"Its confidence in FY progress is going down well with the investment community this early in the year when other corporates are possibly more cautious," he said.
Barratt Developments (LONDON:BDEV) advanced 4 percent after Britain's biggest housebuilder by volume said it expected to build more houses this year than previously forecast, thanks to strong demand and rising sales.
Among sectoral gainers, the UK Oil and Gas index (FTNMX0530) rose 0.4 percent, tracking a rise in crude oil prices supported by bets that U.S. crude stockpiles will fall for a second straight week.
Not all trading updates were positive. Compass Group (L:CPG) fell 2.9 percent after the world's No. 1 catering firm said it remained cautious over the economic environment in some emerging markets. However, it reaffirmed its full-year expectations.
"No news with regards to a new share buy-back scheme looks to be generating some early disappointment," Hargreaves Lansdown (LONDON:HRGV) Stockbrokers equity analyst, Keith Bowman, said.
"Furthermore, challenges for its emerging markets business continue to be navigated, with some increased economic uncertainty and the impact of lower commodity prices on Offshore & Remote client operations providing some drag on performance."
Admiral Group (L:ADML) fell 1.6 percent after the insurer said that Henry Engelhardt had decided to step down from his role as chief executive in one year's time and he would be replaced by co-founder and Admiral chief operating officer David Stevens.