Britain's top shares fell 0.5 percent around midday on Thursday, as investors digested the Bank of England decision to keep interest rates on hold and said it will pump more money into the economy to spur growth.

By 1228 GMT the FTSE 100 .FTSE was down 25.00 points at 5,082.98. The BoE left interest rates unchanged at 0.5 percent, while notching up its quantitative easing programme to 200 billion pounds.

The index initially extended its losses after the announcement, but settled back around levels seen before the rate decisions.

The announcement is as expected. It's largely flagged by the market and that's indicated by a very flat movement on the news, said Tim Whitehead, head of portfolio services at Redmayne-Bentley.

But we need to be alert to the fact that interest rates may go up in the latter part of next year.

Miners took the most points off the index, with Vedanta Resources (VED.L), Xstrata (XTA.L), BHP Billiton (BLT.L), Rio Tinto (RIO.L) and Kazakhmys (KAZ.L) falling 1.1 to 3.1 percent.

Attention turned to the European Central Bank which at 1245 GMT will deliver its verdict on rates. Economists expect the ECB to also hold eurozone rates steady and make no changes to its special lending measures.

The banking sector was also weak. Barclays (BARC.L), HSBC (HSBA.L), Lloyds Banking Group (LLOY.L), Royal Bank of Scotland (RBS.L) and Standard Chartered (STAN.L) shedding 0.3 to 2.7 percent, with the shake-up in the sector earlier in the week weighing on sentiment.

Among individual fallers, Cable & Wireless (CW.L) took the biggest tumble, down 7.8 percent, after the telecoms group revised downwards its full-year earnings guidance. 

Invensys (ISYS.L) dropped 5.9 percent as weakness in orders at its Operations Management division overshadowed a reiteration that its full-year performance will beat last year's. 

BOE KEEPS RATES

In a statement accompanying its interest rate decision, the Bank of England said indicators such as spending and confidence suggest a pickup in the economic activity may soon be evident. It also said the considerable stimulus from the past was still working through the economy

Britain's economy contracted unexpectedly in the third quarter, making the current recession the longest since records began more than 50 years ago.

Earlier in the session, the index trimmed losses after optimism about the outlook for the British economy was lifted by data showing manufacturing output rose faster than expected in September. 

On the upside defensive food retailers Tesco (TSCO.L), J Sainsbury (SBRY.L), and WM Morrison (MRW.L) added 0.1 to 2.2 percent.

Vodafone (VOD.L) rose 1.6 percent helped by results from Deutsche Telekom (DTEGn.DE) which showed good growth from its mobile business.

Tobacco firms British American Tobacco (BATS.L) and Imperial Tobacco (IMT.L) added 1.8 and 1.3 percent respectively.