RTRS: FTSE ends up 1.1 pct as pharmas rally, BoE eyed
* FTSE gains 1.1 percent
* Defensive pharmaceuticals, tobacco gain
* Investors eye Bank of England rate cut on Thursday
By Simon Falush
LONDON, Dec 3 (Reuters) - Britain's leading share index closed 1.1 percent higher on Wednesday, boosted by a rally in defensive drugmakers and expectations of a sizeable Bank of England rate cut.
The FTSE 100 index .FTSE closed up 47.10 points at 4,169.96, having closed 57.37 points, or 1.4 percent higher on Tuesday.
The Bank of England is due to announce a rate decision on Thursday, which is expected to be for a cut of 1 percent, according to a Reuters poll of economists.
In thin, volatile trading the British share index was boosted in late trade by a rise in U.S. equities, with defensive pharmaceuticals and tobacco stocks faring best as data painted an increasingly bleak picture for the UK and global economy.
Heavyweight drug stocks GlaxoSmithKline (GSK.L: Quote, Profile, Research, Stock Buzz) and AstraZeneca (AZN.L: Quote, Profile, Research, Stock Buzz) gained 4.4 and 5.4 respectively.
"It's extremely volatile in all markets with big swings in equities, fixed income and currency markets, but in equity markets I think we have touched a base to rally from," said Neil Parker, market strategist at Royal Bank of Scotland.
Sterling fell to its lowest level in almost 13 years on a trade-weighted basis <=GBP>, weighed by data showing Britain's dominant services sector shrank in November at its fastest pace since the series began in 1996.
The Chartered Institute of Purchasing and Supply/Markit purchasing managers' index for the sector fell to 40.1 last month from 42.4 in Oct, below the consensus forecast of 41.2.
Meanwhile, annual British shop price inflation eased to 2.7 percent in November from 3 percent in October, the lowest since June, the British Retail Consortium said on Wednesday.
"There is lots of nervousness as to how aggressive the Bank of England will be tomorrow," said Henk Potts, equity strategist at Barclays Stockbrokers.
"The bigger the party the worse the hangover, and the credit expansion party was very big so some historically strong medicine is needed from the Bank of England."
Trading in banks was nervous ahead of Thursday's interest rate news as the sector's woes continued to dominate.
HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) and Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz), both risers on Tuesday, lost 3.8 and 0.7 percent respectively, while Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) shed 1.8 percent.
Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), however, added 4.5 percent after an index re-weighting of the stock last night.
Weakness in oil majors was the main drag for blue chips as crude prices CLc1 rallied slightly but stayed around the $47 a barrel level -- over $100 down on this year's peak.
BP (BP.L: Quote, Profile, Research, Stock Buzz) shed 0.5 percent, while Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) fell 0.8 percent and BG Group (BG.L: Quote, Profile, Research, Stock Buzz) lost 3.4 percent.
BP said on Wednesday it has agreed to an asset swap with BG Group in the UK North Sea.
Shares in Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) fell 9.6 percent despite the miner denying market talk of plans for a rights issue.
Other miners were mixed. Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) was down 5 percent, but Anglo-American (AAL.L: Quote, Profile, Research, Stock Buzz) gained 1.5 percent, Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) added 3.9 percent, while Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz) gained 0.1 percent, in spite of trading ex-dividend on Wednesday, after recent share buy-back moves.
BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) firmed 3.8 percent as Citigroup resumed coverage on the stock with an upgrade to "buy" from "hold".
Stagecoach (SGC.L: Quote, Profile, Research, Stock Buzz) was the biggest FTSE 100 faller, down 16.5 percent as a cautious outlook statement accompanied a 24 percent rise in first half profits.
Blue chip transport peer Firstgroup (FGP.L: Quote, Profile, Research, Stock Buzz) lost 8.2 percent, and mid cap Go-Ahead Group (GOG.L: Quote, Profile, Research, Stock Buzz) shed 13.1 percent. (Editing by Greg Mahlich)
