BANK of England governor Mark Carney helped keep the pound above 1.27 dollars for a third day running on Thursday, as he said interest rate hikes were still on the table.

The pound was higher against the US dollar, climbing 0.11% to 1.270, following Mr Carney's comments in the bank's annual report.

Fiona Cincotta, senior market analyst at City Index, said: "Today's weaker dollar was lending a hand to the pound, as did Mark Carney. The BoE Governor suggesting that the UK could still raise rates if the economy performs as expected was some welcome good news for the Brexit battered pound."

But sterling was 0.45% lower against the euro at 1.125 as the common currency surged, boosted by a more positive than expected statement from the European Central Bank (ECB).

This impacted European markets, with the German Dax going into the close 0.23% lower while the French Cac was down 0.36%.

In London, the FTSE 100 was up by 39.63 points, or 0.55%, at 7,259.85.

Under-pressure city heavyweight Neil Woodford was dealt another major blow after St James's Place ended its £3.5 billion association with his firm.

Shares in the FTSE 100 asset manager were down 5p to 1,037p.

Insurance giant Aviva announced plans to axe around 1,800 jobs in the next three years in a bid to save £300 million a year.

Investors reacted positively to the news, pushing shares up 3p to 413.6p.

Online car seller and trading platform Auto Trader continued its impressive growth with rising revenue and profit despite falling car sales throughout the sector, the company revealed.

Shares dipped 2.4p to close at 585p.

Go-Ahead, the transport company behind Govia Thameslink Railway (GTR), revealed strong growth across all three of its divisions.

Its shares surged on the news, jumping 197p to 2,080p.

Facilities management provider Mitie posted a better-than-expected 6% rise in annual underlying earnings to £88.2 million for the year to March 31.

Shares rose 7p to 146.5p, as the result came in higher than feared after Mitie had warned over earnings and falling orders in March.

Entertainment One shares soared after the Peppa Pig maker denied reports that its president is set to leave the firm.

Shares spiked by almost 16%, climbing 55.4p to 405.4p, after the TV and film production business reassured investors that Mark Gordon, president and chief content officer, will remain at the firm.

Engine maker Rolls-Royce announced it had offloaded a £4.6 billion chunk of its pension scheme covering 33,000 members to Legal & General, in the biggest deal of its kind in the UK.

Shares were up 11p at 894p.

Oil prices were little changed, having slumped in the previous session when the Energy Information Administration update showed that US oil stockpiles have significantly jumped.

A barrel of Brent Crude oil was trading at $60.46, down 0.13%.

The biggest risers on the FTSE 100 were Imperial Brands up 112p to 2,073p, British American Tobacco up 87p to 2,915.5p, United Utilities Group up 22.4p to 829.6p and Severn Trent up 47p to 2,046p.

The biggest fallers on the FTSE 100 were Taylor Wimpey down 12.65p to 156.5p, Kingfisher down 10.5p to 207.6p, Hargreaves Lansdown down 81.5p to 1,900p and Vodafone Group down 5.12p to 127.98p.