By Shreyashi Sanyal
(Reuters) -The FTSE 100 stock index was little changed on Thursday as investors weighed the biggest interest rate hike from the Bank of England in 27 years, which raised fears of a looming recession even as it weighed on the pound.
The British central bank's Monetary Policy Committee voted 8-1 for a half percentage point rise in Bank Rate to 1.75% - the highest level since late 2008.
"The Bank of England has clearly decided that now is the right time to bring out more firepower and raise rates by 0.5% for the first time since 1995," said Paul Craig, portfolio manager at Quilter Investors.
"It has clearly taken note of what the Federal Reserve is doing in the U.S. and feels it could be running out of time to grapple inflation and get it under control."
The BoE's move weakened the pound and helped lift the blue-chip FTSE 100 index to session highs moments after the decision, but the index closed the day flat.
The domestically focussed midcap index was up 0.7%.
"The pound's slump in the wake of today's MPC decision underlines the caution investors have regarding the UK economy," said Chris Beauchamp, chief market analyst at online trading platform IG.
Even as recession fears mount across the world, UK stocks have fared better than their peers so far this year.
Shares of Unilever (LON:ULVR) Plc slipped 0.7% after Ben & Jerry's independent board said the company had frozen its directors' salaries last month as a pressure tactic.
Rolls-Royce (LON:RR) dragged down the aerospace and defence sector, tumbling 9% even as the aero-engineer said it would see its squeezed operating profit margin improve in the second half.
Gold miner Centamin Plc (LON:CEY) rose 7.3% after it reported a 4% rise in its first-half revenue supported by higher bullion prices.
Medical technology company ConvaTec jumped 6.8%, among midcap gainers, after reporting higher first-half revenue.