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* FTSE 100 up 0.5%, FTSE 250 adds 0.3%

Feb 14 (Reuters) - UK shares opened higher on Wednesday as markets drew comfort from softer-than-expected domestic inflation data, fuelling hopes for an early interest rate cut from the Bank of England.

The blue-chip FTSE 100 index was up 0.5%, as of 0807 GMT. The midcap FTSE 250 added 0.3% after falling nearly 1.5% in the previous session.

Data showed British consumer price inflation unexpectedly held steady at an annual rate of 4.0% in January, unchanged from December, providing a boost for the Bank of England. Economists polled by Reuters had anticipated an increase to 4.2%.

The sterling weakened against the dollar after the data, last down 0.2%, strengthening equities on the exporter-heavy FTSE 100.

Interest rate cut expectations increased after the data, with money markets expecting around 70 basis points of interest rate cuts this year, up from about 58 bps previously. .

The rate-sensitive homebuilders index was among the top sectoral performers, rising 1.6%.

Among corporate updates, Coca-Cola HBC jumped 4.4% to lead the blue-chip index after the bottler said it expects profit to grow in 2024 and reported upbeat annual profit.

(Reporting by Shristi Achar A in Bengaluru; Editing by Dhanya Ann Thoppil)