By Dow Jones Business News, September 18, 2013, 12:14:00 PM EDT
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Mining firms led U.K. stocks lower on Wednesday, offsetting strength for banks, as investors
waited for the U.S. Federal Reserve's policy decision later in the day.
The FTSE 100 dropped 0.2% to close at 6,558.82, adding to a 0.8% loss from Tuesday.
The soft move came as investors were hesitant of making any big moves ahead of the much anticipated monetary policy
decision from the U.S. Federal Reserve out at 7 p.m. in London, or 2 p.m. Eastern Time.
Analysts expect the central bank to announce a reduction of $10 billion to $15 billion to its $85 billion-a-month
bond-buying program after signs the economy has improved. Read: How stocks may react to the Federal Reserve decision
The Bank of England was also in the spotlight after saying the nine members of its Monetary Policy Committee earlier
in September voted unanimously to keep both interest rates and the asset-purchase program unchanged. The interest rate
was kept at a record low 0.5%, while the quantitative-easing program stayed at 375 billion pounds ($596.48 billion).
"A key question concerned whether there was any serious consideration of reopening the asset purchase program, given
that interest-rate markets have continued to price in a still more aggressive series of rate increases since forward
guidance was introduced last month," said Philip Shaw, chief economist at Investec Securities, said in a note.
"There was relatively little here. The committee did not make a comment to the extent that the shape of the yield
curve was unwarranted (as it has previously)...Its conclusion was that 'were the recovery to falter, the case for
further asset purchases would be stronger,'" he added.
The Bank of England in August laid out its forward guidance on interest rates, saying it will keep rates low at least
until the unemployment level falls to 7%, expected in 2016. Markets, however, have looked to recent upbeat macroeconomic
releases and have started factoring in a rate hike toward the end of 2014.
Among notable movers in London, miners led the benchmark index south as most metals prices dropped.
Shares of Antofagasta PLC dropped 1.8%, Rio Tinto PLC (RIO) gave up 1.3% and BHP Billiton PLC ( BHP ) eased 0.6%.
Shares of Fresnillo PLC lost 3.2% to 10.08 pounds ($17.25) after UBS cut the price target on the silver miner to
GBP11.50 from GBP12.50.
On a more upbeat note, banks helped curb losses for the London index. Shares of Standard Chartered PLC gained 1.4%,
Lloyds Banking Group PLC rose 2.1% and Royal Bank of Scotland Group PLC ( RBS ) put on 0.8%.
Also on the rise, shares of Smiths Group PLC added 2.6% after the engineering company declared a special dividend for
the full year.
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