London stocks edge higher, Shell caps gains

(Reuters) - UK's blue-chip shares rose on Thursday, led by banks and consumer stocks, although they lagged major European peers as a profit warning from Shell hit oil stocks.

The export-oriented FTSE 100 was up 0.2%, while the more domestically oriented FTSE 250 was off 0.6% by 0722 GMT.

The broader pan-European STOXX 600 index was up 0.7%.

Oil major Shell fell 3.3% after it warned on third-quarter profit, citing a sharp drop in refining margins and "significantly" weaker earnings from natural gas trading.

Banks rose 0.9%, while consumer stocks such as British American Tobacco and Unilever climbed 1.1% and 0.5%, respectively.

Britain's construction activity is expected to show a contraction at 0830 GMT, as the housing sector struggles amidst hawkish Bank of England's policies. [ECI]

Fitch, meanwhile, lowered the outlook for its credit rating for British government debt to "negative" from "stable", days after a similar move from rival Standard & Poor's following the government's Sept. 23 fiscal statement.

(Reporting by Johann M Cherian in Bengaluru; editing by Uttaresh.V)