Bank of England's Carney says confident UK slowdown was temporary

NEWCASTLE, England (Reuters) - Bank of England Governor Mark Carney said on Thursday that he now had more confidence the British economy's weak start to the year reflected bad weather, comments that are likely to spur expectations of an interest rate hike next month.

Carney said inflation pressures had continued to firm as the BoE expected and that there was widespread evidence that slack in the economy had been largely used up.

Last month investors were surprised when three out of nine BoE rate-setters, more than expected, voted for an immediate rise in rates, boosting the chances of an increase in August.

There was nothing in Carney's comments to cast doubt over that view.

"Domestically, the incoming data have given me greater confidence that the softness of UK activity in the first quarter was largely due to the weather, not the economic climate," Carney said in a speech to be delivered in Newcastle, north England.

"Overall, recent domestic data suggest the economy is evolving largely in line with the May Inflation Report projections, which see demand growing at rates slightly above those of supply and domestic cost pressures building."

In his speech to the Northern Powerhouse Business Summit, Carney also said protectionist sentiment had risen, citing the United States increasing trade tariffs and other countries retaliating.

Carney said there were signs that a "hostile and uncertain" environment around global trade had dampened activity in the global economy.

If a sustained trade war were to emerge, reduced productivity growth would be expected to compound losses to the economy from reduced trade, Carney said.

(Reporting by David Milliken in Newcastle, writing by Andy Bruce, editing by William Schomberg)