The Bank of England, as expected, kept its benchmark interest rate at a record low at 0.5 percent on Thursday, the level at which it has sat since the financial crisis.

Although Britain's economy has surged since mid-2013, the BoE has kept rates on hold due to a combination of weak pay growth and inflation below its 2 percent target.

So far, only two of the Monetary Policy Committee's nine members have voted for a hike. But expectations have been strong that rates could start to rise in February next year.

Now British policymakers are casting a nervous eye at the euro zone and in particular Germany, which this week announced a string of far weaker than expected economic data.

Adding to the sense that rate rises might come later than recently thought, the Fed has sounded worried about the impact on the U.S. economy of the slowdown in Europe and in Asia.

British finance minister George Osborne called on the European Central Bank to do more to help growth, despite the concerns of Germany about the risks of the central bank buying government bonds, the most powerful stimulus at its disposal.

"You need credible fiscal plans, and the Germans would certainly agree with me on that, but I think you also need the European Central Bank doing its bit to help," he told the BBC.

In Britain, there are some tentative signs of a cooling. The British Chambers of Commerce warned of a "first alarm bell" for the recovery after firms reported the weakest export growth in almost two years and a big slowdown in manufacturing.

British house prices nationwide showed their smallest increase in 15 months, according to a survey this week.

If sustained, the slowdown could feed into next year's general election and Conservative Prime Minister David Cameron's bragging rights over an improved economy.

Investors earlier on Thursday showed they were less convinced that the BoE would raise interest rates in early 2015.

Short-dated gilt prices rallied with other major government bonds and short sterling interest rate futures <0#FSS:>, bets on when rates will rise, rose strongly.

Rob Wood, a former BoE economist, said the cooling of Britain's economy had been gentle so far and Germany's economy could bounce back if the ceasefire in Ukraine holds and eases concerns that have weighed on the economies of eastern Europe.

"Still, the key point is that if euro zone, and especially German, sentiment and growth does not turn up over the next few months then the BoE could delay a rate hike," said Wood who is chief UK economist at Berenberg bank. "Our base case is that the BoE will hike in February, but latest developments raise the risk that the BoE will wait longer to hike."

BLAME EUROPE

The BoE made no statement alongside its monthly policy announcement, which included a commitment to maintain at 375 billion pounds the stockpile of assets which it acquired under its programme of government bond purchases.

Minutes of the MPC's meeting are due to be published in just under two weeks' time. The minutes of last month's meeting suggested growing concern at the situation in Europe.

In September, MPC members saw only a modest direct impact of the euro zone's slowdown, but minutes of their meeting showed they felt "a prolonged period of poor growth and very low inflation could have a larger impact if it led once again to uncertainty about the sustainability of euro-area public and external debt".

Data on Tuesday showed German industrial output in August plunged at its steepest rate since the depths of the financial crisis. The International Monetary Fund has given a nearly 40 percent probability that the euro zone would enter recession over the next year.

The British economy struggled to grow during 2011 and 2012 when the euro zone was deep in a debt crisis that threatened to break up the single currency area.

Economists say the current growth problems in the single currency area will not deliver as big a hit to Britain. But the slowdown is a problem for the British manufacturing sector which accounts for about 10 percent of the country's total economy.

Data published earlier this week showed British manufacturing edged up just 0.1 percent between August and July. Surveys have suggested that problems in the euro zone weighed on the sector more heavily in September.

(Additional reporting by Andy Bruce and William James; Editing by Jeremy Gaunt)

By William Schomberg