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Sept 19 (Reuters) -UK shares rose on Thursday, tracking gains in global equities after the Federal Reserve initiated a50-basis-point rate cut, while investors looked ahead to a Bank of England (BoE)policy decision later in the day.

London market gains were broad-based, with the blue-chip FTSE 100 .FTSE up 0.9%, mid-caps .FTMC gaining 0.8% and small- caps .FTSC rising 0.3% by0710 GMT.

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 labourmarket.

The move boosted confidence for an economic "soft landing" in the world's largest economy and lifted risk sentiment, with global equities rising and sterling GBP=D3 gaining against the dollar. MKTS/GLOB

Across the Atlantic, UK interest rates are expected to come down more slowly than the U.S., with the BoE widely expected to keep benchmark rates on hold at 5%.

Despite kicking off its easing cycle in August, UK policymakers continue to grapple with rising inflation, as evidenced by Wednesday's report that showed a quickening pace in inflation in the services sector.

The pace of the BoE's bond sales, ahead of the Labour-led government's first budget, will also be closely watched.

"The BoE probably wants to see the new UK government's first budget in October and that the high services inflation (over 5% in August) shows signs of slowing down, before a decision is made on further cuts," said Jens Magnusson, chief economist at SEB.

All major FTSE sector indexes opened higher, led by a 2.6% rise in the retail sector .FTNMX404010.

Lifting retailers, Next NXT.L jumped 6% to the top of the FTSE 100 after announcing it was on track to make anannual profit of almost 1 billion pounds ($1.32 billion).

Ocado Group shares OCDO.L soared nearly 15% after Ocado Retail lifted revenue forecastfor 2023-2024, as sales jumped in its latest quarter.

($1 = 0.7549 pounds)

Reporting by Lisa Mattackal in Bengaluru; Editing by Sonia Cheema

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