London stocks climb as surprise inflation dip spurs rate-pause bets

Sept 20 - UK stocks rose on Wednesday after data showing a surprise fall in inflation in August boosted sentiment and raised hopes that the Bank of England was nearing the end of its interest rate hiking cycle.

Britain's annual consumer price inflation unexpectedly fell to 6.7% last month from 6.8% in July, data showed, prompting investors to bolster bets that the BoE would pause its historic run of rate hikes as soon as Thursday."CPI data makes tomorrow's decision a little bit more balanced and the market is no longer fully priced for a rate hike," said Michael Metcalfe, head of macro strategy at State Street Global Markets.

Money markets are betting on a 45% chance for the BoE to hold interest rates steady at 5.25% on Thursday. Rate-sensitive homebuilder stocks jumped 3.8%, leading sectoral gains and aiding a 1.2% rise in mid-cap stocks .

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