By Shashwat Chauhan, Rupali Chaudhary and Khushi Singh
(Reuters) -Britain's FTSE 100 was dragged down by a flurry of downbeat earnings on Thursday though the export-heavy index regained some ground after the Bank of England (BoE) raised interest rates by a quarter percentage point as largely expected.
The blue-chip FTSE 100 lost 0.4%, after falling as much as 1.6% before the BoE's rate decision.
The BoE raised its key interest rate to a 15-year peak of 5.25%, offering some respite to market participants who had been concerned about a larger rate hike.
"It's a relief that the BoE only moved by 25 basis points because half (a percentage point) would have risked being a policy mistake," Andrew Bell, CEO of Witan Investment Trust (LON:WTAN), said.
"Where the bank goes from here is going to be much more data dependent in terms of further rate hikes."
The BoE gave a new warning that borrowing costs were likely to stay high for some time.
Rate-sensitive homebuilders, however, added 0.2% while the real estate sector rose 1.0%.
Stocks also came under pressure globally as U.S. bonds yields hit nine-month peaks following strong private jobs data and the announced refunding of Washington's maturing debt. [US/]
Meanwhile, the final reading of July UK S&P Global Services Purchasing Managers' Index (PMI) showed growth across British services companies slowed to its lowest level since January.
Telecom firm BT Group (LON:BT) and consumer staples major Unilever (LON:ULVR) were drags, down 4.2% and 1.4% respectively, as their shares traded ex-dividend.
The aerospace and defence sector, however, was a bright spot, up 1.5%, boosted by a 4.5% gain in Rolls-Royce (LON:RR) on a strong recovery in profit.
The more domestically-focussed FTSE 250 midcap index added 0.1%, lifted by Helios Towers.
Mondi (LON:MNDI) slumped 6.7% after reporting a 28% drop in half-yearly underlying core profit.
Smith+Nephew lost 2.4% after the medical products maker missed first-half yearly profit estimates.