(Updates after Bank of England meeting)

By Stefano Rebaudo

Aug 7 (Reuters) -

British government bond yields rose and stocks fell on

Thursday after the

Bank of England cut interest rates

by 25 basis points as expected, but inflation fears meant

four of its nine policy makers voted to keep rates on hold.

Britain's blue chip FTSE 100 index extended an

earlier loss, and was last down 0.7%, with the mid cap FTSE250

index giving back earlier gains to trade flat.

Yields on British government bonds, or gilts, rose

across the curve on the hawkish voting split. The benchmark

10-year yield was up 6 basis points at 4.59%. Rate sensitive two

year yields also rose 6 bps to 3.89%.

Those higher yields supported the pound. It was last up

0.5% on the dollar at $1.3407, and also strengthened on the

euro, to 87 pence to the common currency.