LONDON: Britain's stock market retreated on Thursday as energy shares fell on dollar strength despite an earlier market rally after dovish remarks by Bank of England Governor Mark Carney.
The Bank of England forecast little pick-up in inflation as it held interest rates steady, prompting investors to push back expectations for a rate hike.
Seven of the eight BoE policymakers voted to keep interest rates unchanged at a record low of 0.5 percent, where they have been since 2009, and the central bank reduced its forecast for economic growth for this year and 2016.
"Today's Bank of England interest rate announcement was more dovish than markets were expecting," Darren Ruane, head of fixed income at Investec Wealth & Investment, said in a note.
"Indeed there was some speculation that (policymaker) Ian MacCafferty would be joined by at least one further dissenter, but this did not occur and the inflation profile has been reduced."
The FTSE 100 closed in negative territory, down 0.8 percent at 6,364.90 points despite rising after the BOE decision at mid-day.
Resource companies led the index lower as oil giants BP and Royal Dutch Shell retreated on a stronger dollar, losing 2.9 percent and 2.2 percent respectively.
Mining companies also underperformed, with Anglo American tumbling 7.7 percent, Antofagasta down 4 percent and Glencore down 3.5 percent.
The FT350 mining index fell 3.7 percent, its biggest daily setback since the end of September.
"The problem with the FTSE is that it is a blue-chip index which is predominated by mining companies and petroleum companies," said Ken Odeluga, market analyst at City Index.
"(Resource companies') main commodity is denominated in dollars, so therefore... they're not going to see much benefit."
Retailer WM Morrison also fell, shedding 5.6 percent after reporting another drop in quarterly underlying sales.
At the top of the index was the RSA Insurance Group, which gained 3.4 percent after reporting a rise in third-quarter net asset value.
Drugmaker Astrazeneca also advanced, up 2.9 percent after lifting its 2015 forecasts.
Among mid-caps, Amec Foster lost 23.2 percent after it cut its dividend in half, pressured by a drop in oil prices.
Thomas Cook fell 7.3 percent after Britain suspended flights to and from the Egyptian Red Sea holiday resort of Sharm al-Sheikh. Authorities are investigating the possibility that a bomb planted by Islamic State militants caused last weekend's crash of a Russian airliner over the Sinai Peninsula.
The FTSE 100 is down by around 2.8 percent since the start of 2015, and some 10 percent below a record high of 7,122.74 points reached in April.
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