FTSE falls sharply as ambitions cool on U.S. QE

By David Brett

LONDON (BestGrowthStock) – Britain’s top shares posted their biggest one-day losses in over two months Wednesday, hit by market concerns that further quantitative easing measures in the United States might be less aggressive than expected.

The FTSE 100 was down 61.28 points, or 1.1 percent, at 5,646.02, its lowest closing level since October 5, adding to the 0.8 percent loss Tuesday, with some traders fearing the start of a sizeable retracement.

“Given the recent gains and the difficulty the market had pushing through the 5,800 level, a pullback to around 5,400 looks increasingly likely in coming days,” said Manoj Ladwa, senior trader at ETX Capital.

Mining and energy stocks were the worst performing blue chip sectors, falling along with commodities which came under pressure from investors worried that the U.S. Federal Reserve might not feed markets with as much cheap cash to boost growth as they hoped.

Kazakh copper miner Kazakhmys dropped 5.0 percent, while Xstrata fell 3.8 percent after revising terms on its A$428 million ($422 million) takeover offer for Australia’s Sphere Minerals.

The Wall Street Journal said the Federal Reserve was likely to reveal a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months.

A Reuters survey this month found U.S. primary dealers’ projections for the size of the Fed’s expected quantitative easing ranged from $500 billion to $1.5 trillion.

“(People) expect QE2, and now they’re debating exactly what levels of QE2 we’re likely to see. I think there have been some murmurs around the $200 billion mark which has disappointed a few people,” Joshua Raymond, market strategist at City Index, said.

Oil majors BP and BG Group were off 1.7 and 1.0 percent respectively, with crude also easing.

U.S. DATA FUELS ANXIETY

Economic data from the world’s biggest economy only added to investors’ confusion over the extent of the Fed’s QE program.

Demand for long-lasting U.S. manufactured goods, excluding aircraft, unexpectedly fell last month and a key gauge of business capital spending plans also eased, underscoring the economic recovery’s tepid pace.

Wall Street echoed global equity losses as London closed on Wednesday, with the Dow industrials and the S&P 500 each dropping about 1 percent.

In the UK, British American Tobacco, the world’s second-biggest maker of cigarettes, slid 1.5 percent after posting downbeat Q3 results and saying the recession’s impact on smokers showed no sign of abating.

Financials, which have lagged the recent blue chip rally, were slightly higher with Barclays, up 1.8 percent and Lloyds Banking Group 1.7 percent ahead.

British investment manager Schroders Plc added 1.2 percent.

GlaxoSmithKline and Whitbread both fell after going ex-dividend.

(Editing by David Cowell)

FTSE falls sharply as ambitions cool on U.S. QE