Homebuilders lift FTSE indexes as yields retreat

Sept 16 (Reuters) - British stocks rose on Wednesday as housing and construction shares rallied on the back of strong results from Barratt Redrow and a sharp retreat in gilt yields, while investors awaited the U.S. Federal Reserve's interest rate decision.

The blue-chip FTSE 100 index rose 0.3% to 10,688.47 points, while the midcap FTSE 250 jumped 1.1% to 24,070.20 points.

• Britain's biggest homebuilder Barratt Redrow jumped nearly 12%, its biggest percentage gain in nearly six years, after the company reported an improving reservation rate, a strong order book and a forecast-beating profit.

• The FTSE 350 household goods & home construction index and construction and materials index rallied 7% and 4.6%, respectively, as the rate-sensitive sectors drew comfort from a sharp drop in yields.

• Short-dated British government bond yields headed for their biggest one-day drop since May 20, falling more sharply than elsewhere and reversing some of this month's rise caused by the escalation of the conflict in the Gulf. The 2-year gilt yield touched a low of 4.752% as oil prices eased from recent highs. [O/R]

• British inflation accelerated to a five-month high of 3.1% in August, though price growth, excluding surging energy costs, remained stable, official figures showed.

• The Bank of England is slated to announce its interest rate decision on Thursday. Traders expect the BoE to hold interest rates steady at 3.75%  but still see at least a 41-basis-point rise by the year-end, according to LSEG-compiled data.

• The U.S. central bank is widely expected to hike interest rates by 25 basis points later in the day, and traders will be paying close attention to any forecasts on inflation or interest rates from Fed Chair Kevin Warsh.

• Among mid-caps, greeting card retailer Moonpig dipped 1.2% despite maintaining its annual outlook, with analysts pointing to consumer spending concerns and profit-taking.

(Reporting by Anand Gopal in Bengaluru; Editing by Vijay Kishore, Alexandra Hudson)