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FTSE 100 rises 0.4%, FTSE 250 adds 0.7%

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Watches of Switzerland ( WOSGF ) slumps after margin hit warning

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Currys ( DSITF ) up after beating profit expectations

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UK services sector expands at fastest pace since August

July 3(Reuters) - The UK's main stock indexes rose on

Thursday in broad-based gains after British Prime Minister Keir

Starmer's office gave finance minister Rachel Reeves his full

backing, easing concerns over her future.

The blue-chip FTSE 100 and the midcap index

had closed in the red on Wednesday after Reeves' tearful

appearance in parliament following a series of U-turns on

welfare reforms that blew a hole in her budget plans.

Britain's bond markets also steadied after debt worries led

to a selloff in the previous session.

The blue-chip FTSE 100 was up 0.4% by 1000 GMT,

while the midcap index gained 0.7%.

The government managed to pass its welfare reform bill on

Tuesday but had to remove long-term cost saving measures,

resulting in concerns that balancing the public finances will

require raising taxes or cutting spending elsewhere.

"Some worries remain about the government being backed into

a corner and losing its grip on public finances," said Susannah

Streeter, head of money and markets at Hargreaves Lansdown.

"Investors may still be on alert to fresh opposition to

government plans to trim spending, to try and abide by its

fiscal rules and keep bond markets onside."

Chemical stocks led sectoral gains, rising

1.9%. Croda ( COIHF ) and Elementis ( EMNSF ) were both up over 2%.

Among individual stocks, luxury retailer Watches of

Switzerland ( WOSGF ) fell 8.3% and was among the top midcap

decliners after warning of a margin hit due to tariff pressures.

Electricals retailer Currys ( DSITF ) added 7.7% after

beating market expectations for annual adjusted pre-tax profit.

Data from the S&P UK services PMI showed that the British

services sector activity expanded at the fastest rate in almost

a year, while the prices charged rose at the slowest pace in

nearly four years.

The Bank of England is closely assessing service sector

prices to gauge inflation pressure. Investors widely expect a

rate cut in August.

Across the Atlantic, U.S. nonfarm payrolls data, due later

in the day, will be monitored as a key indicator that could

influence Federal Reserve rate cuts.

(Reporting by Twesha Dikshit; Editing by Saumyadeb Chakrabarty)