For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window

Updated at 1540 GMT

By Khushi Singh and Lisa Pauline Mattackal

Sept 19 (Reuters) -The UK's benchmark stock indexes ended higher on Thursday, after the Bank of England kept rates on hold, as widely expected, and extended its bond reduction plan for another year.

The blue-chip FTSE 100 .FTSE was up 0.9%, while the mid-caps .FTMC gained 1.6%. Both indexes touched their highest levels in over two weeks.

BoE policymakers voted 8-1 to keep benchmark rates on hold at 5%, though Governor Andrew Bailey said cooling inflation pressure meant the BoE should be able to cut interest rates gradually over the months ahead.

"The Committee stressed a relatively patient approach towards further normalisation, which remains warranted given the relatively persistent nature of underlying price pressures within the UK economy," said Michael Brown, senior research strategist at Pepperstone.

They also voted to run down the bank's stock of British government bonds by another 100 billion pounds over the coming year.

The British pound GBP=D3 touched its highest since March 2022 after the decision.

After easing policy in August, BoE policymakers continued to grapple with rising inflation. A report on Wednesday showed a quickening pace of inflation in the services sector.

UK rates are now expected to come down at a slower pace than in the euro zone and the United States. The Fed eased interest rates by a larger-than-usual 50 basis points on Wednesday, with Chair Jerome Powell citing easing inflation and a need to support the labour market. MKTS/GLOB

UK stocks continue to lag developed market counterparts, with the FTSE 100 up 7.7% year to date versus the S&P 500's .SPX 19.8% and the STOXX 600's .STOXX 8.9% gains.

Most FTSE sector indexes were trading higher, with aerospace and defence .FTNMX502010 leading with gains of 3.6%.

Among individual stocks, online grocer Ocado OCDO.L advanced 2.8% after Ocado Retail lifted its forecast for 2023-2024 year.

S4 Capital SFOR.L fell 5.9% after the ad group downgraded its revenue forecast on weakness in demand from its tech clients.

Reporting by Khushi Singh, Lisa Mattackal in Bengaluru; Editing by Sonia Cheema and Eileen Soreng, Editing by William Maclean

 For related prices, Reuters users may click on - * UK stock report .L FTSE index: 0#.FTS6 techMARK 100 index: .FTT1X FTSE futures: 0#FFI: Gilt futures: 0#FLG: Smallcap index: .FTSC FTSE 250 index: .FTMC FTSE 350 index: .FTLC Market digest: .AD.L Top 10 by vol: .AV.L Top price gainers: .NG.L Top % gainers: .PG.L Top price losers: .NL.L Top % losers: .PL.L * For related news, click on - * UK hot stocks: HOT and GB Wall Street: .N Gilts report: GB/ Euro bond report GVD/EUR Pan European stock report: .EU Tokyo stocks: .T HK stocks: .HK Sterling report: GBP/ Dollar report: USD/ * For company prices, click on - * Company directory: UKEQ By sector: FTAX * For pan-European market data, click on - * European Equities speed guide................ EUR/EQUITY FTSE Eurotop 300 index........................... .FTEU3 DJ STOXX index................................... .STOXX Top 10 STOXX sectors........................ .PGL.STOXXS Top 10 EUROSTOXX sectors................... .PGL.STOXXES Top 10 Eurotop 300 sectors.................. .PGL.FTEU3S Top 25 European pct gainers.................... .PG.PEUR Top 25 European pct losers..................... .PL.PEUR