June 5 (Reuters) - British equities rose on Wednesday, buoyed by weaker-than-expected U.S. labour data that fuelled expectations of a rate cut in September, while investors awaited the European Central Bank's interest rate decision on Thursday.
The blue-chip FTSE 100 (.FTSE), opens new tab gained 0.2% after two sessions of declines, while the mid-cap FTSE 250 edged up 0.3% to 20,779.84 points.
Investors cheered signs of cooling in the U.S. labour market, where data revealed job openings plunged to their lowest in over three years, reinforcing predictions of a rate cut by the Federal Reserve in September.
Traders are now pricing in a 65% chance of a September rate cut by the Fed.
Spirits were also lifted by the anticipation of a 25 basis points cut by the ECB on Thursday.
Analysts expect the Bank of England to emulate the ECB's moves. The British central bank convenes in two weeks to decide on interest rates.
"We are finally getting to the point where central banks are going to start cutting interest rates," Fiona Cincotta, senior market analyst at City Index said.
"The outlook is looking encouraging and there's potential for the FTSE to retake that all-time high over the coming months."
Among individual stocks, Paragon Banking (PAGPA.L), opens new tab was the top gainer on the mid-cap index with a 5.2% jump after the lender reported its half-year results.
Retailer WH Smith (SMWH.L), opens new tab gained 3.2% after reporting results for the 13 weeks ended June 1.
Centrica (CNA.L), opens new tab fell 5% after the gas owner said profitability will be strongly weighted towards the first half of the year.
Discount chain B&M (BMEB.L), opens new tab was the top loser on the FTSE 100 with a 5% drop after its preliminary full-year results.
Investors' focus will now be on the U.S. payrolls report due on Friday.
Reporting by Pranav Kashyap in Bengaluru; Editing by Varun H K and Mrigank Dhaniwala
