FTSE little changed as investors await Fed

By Simon Falush

LONDON (BestGrowthStock) – Britain’s top share index was little changed in early trade on Tuesday, as investors moved to the sidelines ahead of the latest Federal Reserve Open Market Committee announcement.

By 0859 GMT the FTSE 100 (.FTSE: ) was 1.13 points lower at 5,859.62 after it closed up 0.8 percent on Monday at its highest close since November 9, although in extremely light trade.

Energy stocks provided the biggest support to the index, lifted as crude edged toward $89 per barrel.

BG Group (BG.L: ) added 0.7 percent while Royal Dutch Shell (RDSa.L: ) gained 0.4 percent.

However moves were broadly muted, with investors reluctant to take significant positions before the Fed’s announcement.

Analysts expected the Fed to remain in a holding pattern as officials evaluate the recent launch of a bond-buying program and the health of the U.S. economic recovery after a spate of encouraging data.

Any signs that there would be a reduction in the extent of quantitative easing, though this is unexpected, could cause a setback for equities.

“Any indication that there is going to be more caution from the Fed could send a little wave through equity markets, but I think this is unlikely and everybody’s hoping there will be no shocks between now and next week,” said Giles Watts, head of equities at City Index.

Miners were generally weaker with Rio Tinto (RIO.L: ) down 0.9 percent, but Eurasian Natural Resources (ENRC.L: ) was the top FTSE 100 gainer, up 2.2 percent after UBS upgraded it to “buy” from “neutral.”

Xstrata (XTA.L: ) added 0.8 percent after also being raised by the broker to “buy” from “neutral.”

Whitbread (WTB.L: ) was the top blue-chip faller, down 2.8 percent despite strong profit growth in its current financial year as Panmure Gordon downgraded it to “hold” from “buy,” saying it does not expect consensus expectations to be raised.

TUI Travel (TT.L: ), with traders citing valuation grounds after its parent company TUI AG (TUIGn.DE: ) reported strong full year results.

Technical resistance after strong recent gains is helping to keep the index in check, analysts said.

“The FTSE 100 ran into resistance once again near the 5,875 price level, forming a double top on the intra-day charts and spurring a sell-off into last week’s trading range,” Jonah Ford, an analyst at Autochartist, said.

“The current sideways price action hints at near term weakness in share values, given the market’s inability to sustain the momentum enjoyed with last week’s rally,” he added.

On the domestic economics front, house prices in England and Wales fell for a fifth consecutive month in November, albeit at a slower pace than analysts had expected, the Royal Institution of Chartered Surveyors said.

Investors were waiting for UK November CPI data, scheduled for release at 0930 GMT.

U.S. economic data out on Tuesday includes November retail sales, due at 1330 GMT, with November producer prices also at 1330 GMT, and October business inventories at 1500 GMT.

(Editing by Louise Heavens)

FTSE little changed as investors await Fed