(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window)

*

FTSE 100 flat, FTSE 250 falls 0.4%

*

UK inflation rises to highest since early 2024 at 3.8%

*

Ithaca Energy jumps after lifting annual production

forecast

By Ragini Mathur

Aug 20 (Reuters) - Britain's FTSE 100 held steady on

Wednesday as gains in consumer and healthcare sectors offset

losses in energy and mining stocks, while investors assessed a

hotter-than-expected inflation report.

As of 0945 GMT, the blue-chip index FTSE 100 was

largely flat. Meanwhile, the FTSE midcap index dropped

0.4%, on pace to mark its steepest fall in over two weeks.

The UK's consumer price inflation hit its highest in 18

months in July when it increased to 3.8% from 3.6%, once again

leaving the country with the fastest rate of price increases

among the world's largest rich economies.

"Inflation was always likely to rise today, but this report

is definitely on the hotter side," said Luke Bartholomew, deputy

chief economist at Aberdeen.

"In particular, services inflation, which the Bank of

England watches very closely as a measure of underlying

inflation pressure, popping higher will be a source of concern

among policymakers."

The data led to a shift in market expectations on BoE's

monetary policy, with traders now betting on a quarter-point

reduction in March next year. Earlier this month, markets had

anticipated a cut before the end of 2025.

Sterling also strengthened slightly following the data

release.

The inflation report's interest rate implications led to a

1.3% fall in homebuilders on concerns about

mortgage affordability.

Energy sector declined 0.7% as heavy-weight

BP dropped 1.3% after the oil major said operations at

its refinery at Whiting, Indiana, were affected due to flooding.

Metal mining stocks dropped 0.8%.

Aerospace and defence index came under

pressure for a second consecutive day, dipping 1.2%, after

marking its largest single-day decline since early April in the

previous session.

On the flip side, consumer stocks and

healthcare companies supported gains on the

blue-chip index, rising 0.7% and 0.5% respectively.

Among individual movers, Ithaca Energy jumped 8%

after the oil and gas company lifted its 2025 production

forecast.

Medical equipment maker Convatec ( CNVVF ) rose 5.5% after it

announced $300 million share buyback programme.