The FTSE 100 index rose 0.3pc with BP and Shell both up more than 1pc as Middle East tensions drove oil prices higher.

The more domestically focused midcap index outperformed, rising 0.7pc to its highest in nearly a month. It was led higher by a 22pc surge in car auction firm BCA Marketplace after it received a nearly 2 billion pound takeover bid from private equity firm TDR Capital.

The pound trimmed gains after the BoE cut its second-quarter growth forecast to zero and highlighted risks from global trade tensions and growing fears of a no-deal Brexit.

But exporter stocks still took a hit as sterling held on to some earlier gains. Reckitt Benckiser, HSBC and AstraZeneca all edged lower.

The BoE statement lifted hopes of more stimulus, after the Fed's statement late on Wednesday raised expectations that a decade-long global rally in stock markets may not quite have run out of steam.

"With the US Federal Reserve now striking a more dovish pose as it also sees rising downside risks in the global economy, we shouldn't entirely rule out the possibility the next interest rate move may be downwards," Hargreaves Lansdown analyst Laith Khalaf said.

Precious metals miner Fresnillo led gains with a 5.5pc rise, having earlier jumped as much as 7pc, as gold prices hit their highest in more than five years after the statement.

British Airways owner IAG and easyJet were up nearly 3pc, recovering from steep falls in the last session when HSBC cut its rating on the stocks.

But London-listed shares in Carnival slumped 12pc on their worst day in roughly 7-1/2-years as the cruise operator cut its profit forecast due to the Trump administration's sudden ban on cruises to Cuba.

Domino's Pizza Group Plc jumped 11pc after a media report that the company is expected to appoint internal candidate Andrew Rennie as its new CEO.

Dixons Carphone recouped some losses to be down 5.1pc after earlier touching a decade-low, as it reported a slump in full-year profit and pointed to worse to come as it struggles in a fierce mobile phone retail market.

In contrast, homewares retailer Dunelm jumped 8.5pc to a three-year high after it raised its earnings forecast for the second time in just over two months, while clothing retailer N Brown Group advanced 3pc on results.