LONDON, April 4 - Slower growth in Britain's dominantservices sector due to the foot-and-mouth epidemic makes an interest ratecut by the Bank of England almost a certainty this week, economists saidon Wednesday. A monthly survey by the Chartered Institute of Purchasing and Supply(CIPS) showed growth in services easing to a six-month low as the farmingcrisis hit hotel and restaurant bookings and affected hauliers. The overall seasonally-adjusted PMI Business Activity Index for servicescompanies slowed to 56.3 in March, down from 57.1 in February and theweakest figure since last September. A PMI reading above 50 indicatesexpansion, below a contraction. The figures were released as the Bank of England's Monetary PolicyCommittee (MPC) met to review its benchmark repo rate of 5.75 percent.The MPC will announce its monthly rate decision around 1100 GMT onThursday. "The data probably make a rate cut tomorrow a done deal. We look for a25 basis point cut but recent developments have made for some risk of 50basis points," said Jeremy Hawkins, economist at Bank of America.

SERVICES SUFFER ACROSS EUROPE
A separate survey by the Confederation of British Industry on retailingshowed retail sales remained steady in March but there is lingering concernthe U.S. economic slowdown could affect consumer confidence and in turnHigh Street spending. The slowdown in Britain's services sector growth was mirrored in Europe,where the euro zone services PMI fell to a 26-month low, increasingpressure on the European Central Bank to ease its benchmark interest rateof 4.75 percent. "The fall in UK CIPS may be a little more than expected but it still standsup well in comparison with the rest of Europe. Foot-and-mouth looks to belargely to blame so the underlying tone is probably rather firmer than theheadline suggests," said Hawkins. The MPC left rates on hold last month because of continued robustdomestic economic data but since then figures, particularly from the hard-pressed manufacturing sector, have started to show an influence from therapid deterioration in the U.S. economy. A CIPS report on manufacturing on Monday showed the PMI for Marchslipping below 50 for the first time since October to 49.7 -- the weakestreading for almost two years. The CIPS surveys, which are sponsored by , are regarded byeconomists as providing vital clues to business trends before they show upin official data. MPC members, including BoE chief Sir Edward George, have expressed awillingness to help make sure world growth does not slump and the MPCwill be only too conscious that rates in Britain, the world's fourth largesteconomy, are now the highest in the Group of Seven leading industrialnations. The U.S. Federal Reserve has cut rates by 150 basis points so far this yearto 5.0 percent while in the euro zone, which includes G7 members France,Germany, Italy, rates are at 4.75 percent. In Japan rates have beeneffectively cut to zero.

FOOT-AND-MOUTH IMPACT STARTS TO BITE
The CIPS survey on services was one of the strongest indications yet of theimpact the foot-and-mouth crisis is having on the UK economy.Economists polled by said last week that the livestock diseasecould shave Britain's growth rate by 0.3 percentage points this year toabout 2.2 percent. "This foot-and-mouth crisis is now an additional factor and if it continues tothe summer then tourism industry is going to be hit hard and it's going to lopquite a hefty chunk off GDP growth this year," said Stewart Edwards ofStandard and Poor's. The MPC will also note that price rises for service companies' costs andcharges fell to 18-month lows, confirming that inflationary pressures remainvery tame. Currently underlying inflation, or RPIX, is at just 1.9 percent and has beenbelow the MPC's government-set target of 2.5 percent for almost twoyears, in spite of robust growth and tumbling unemployment. House price inflation figures, released by mortgage lender Halifax Plc onWednesday, showed property values have risen a relatively modest 4.1percent over the past year. The figure was unlikely to trouble the MPC which, in the past, has watchedBritain's booming property market warily due to its strong relationship withconsumer sentiment and spending.