Britain's FTSE Falls For Third Day Ahead Of Fed Minutes

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Britain's benchmark equity index fell for the third straight day on Wednesday to touch six-week lows, with investors anxious over the prospect of a forthcoming scaling back of U.S. monetary stimulus.

Britain's FTSE Falls For Third Day Ahead Of Fed Minutes
 
* FTSE 100 falls 0.5 percent
 
* Investors expect slowdown in U.S. stimulus in September
 
* Ex-dividend factors weigh
 
* Miners hit by weaker commodity prices
 
Britain's benchmark equity index fell for the third straight day on Wednesday to touch six-week lows, with investors anxious over the prospect of a forthcoming scaling back of U.S. monetary stimulus.
 
The minutes of the U.S. Federal Reserve's July meeting, out after market close on Wednesday, may give clues on its future policy, and bond yields have already risen over the last month on expectations that the Fed may start to slow the pace of its asset purchases - known as quantitative easing - next month.
 
"It really is a question of seeing what happens when the Fed releases its minutes, and the speculation is that there may be a slowing of QE, which is why the market has been drifting down these last few days. When volume is light, it leads to a tail-off quite quickly," Mark Foulds, sales trader at ETX Capital, said.
 
The market also took a technical hit as a clutch of companies including bank HSBC and Intercontinental Hotels began trading without entitlement to their latest dividend payout, automatically shaving more than 10 points off the index.
 
The blue-chip FTSE 100 index was down by 0.5 percent, or 34.24 points lower, at 6,419.22 points at 1445 GMT, with volume just 50 percent of its 90-day average.
 
HSBC was hit additionally by its international exposure, with the rupee hitting an all-time low against the dollar as emerging markets bore the brunt of concerns over the stimulus programme, which has pushed down bond yields and helped to drive a global equity rally so far this year.
 
"The downtrend from the beginning of August is just accelerating, but as everyone is factoring in tapering (of stimulus), then it's hard to see how the market can go much lower," Mike van Dulken, head of research at Accendo Markets, said, adding that he was monitoring support around 6,400.
 
Miners were the biggest sectoral fallers after ex-dividends were accounted for, dropping 1 percent on caution in demand for stimulus-sensitive copper and for safe-haven gold, which could lose its appeal if the dollar strengthens.
 
Despite the retreat from a 13-year high hit in May, the FTSE is still up 9 percent since the start of 2013. Citi strategists said they preferred the UK market to continental European ones, with investors encouraged by signs of an economic recovery in Britain.
 
"Once the Fed does speak, we may see another 100 points down, but long term I see this market as fairly bullish... I think the market will maintain the strength its had all year and we'll be back up above 6,500 before we know it," ETX Capital's Foulds said.
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