Britain's FTSE weakens, Fed in focus

Wed Mar 20, 2013 1:21pm EDT

* FTSE 100 down 0.1 percent

* Miners weaken, caution ahead of Fed

* Ex-divs knock 11.78 points off index

* Housebuilders see strong post-UK budget gains

By Tricia Wright

LONDON, March 20 (Reuters) - Britain's top shares fell on Wednesday, weighed down by mining stocks, with traders citing some anxiety ahead of the outcome of a U.S. central bank meeting.

The FTSE 100 ended down 8.62 points, or 0.1 percent, at 6,432.70, declining for a fourth consecutive session - a run of losses not seen since Nov. 2012.

Mining stocks, among the most sensitive to market nervousness, were left nursing a 0.8 percent drop.

ENRC was among the worst off, down 1.9 percent in trading volume at more than 1-1/2 times its 90-day daily average, after the Kazakh miner took a larger than expected $1.5 billion charge, dragging it to a loss in 2012.

Peer Anglo American was the biggest laggard on the FTSE 100, off 2.6 percent as the stock, alongside Aviva, HSBC and InterContinental Hotels, traded without the attraction of its latest dividend.

In all, companies trading ex-dividend exerted downward pressure on the FTSE 100 index to the tune of 11.78 points.

"A slight bit of caution before the completion of the Fed meeting... Although they're not likely to change any policy at all, investors are just worried whether there will be a shift towards a slightly more hawkish disposition or not," Chris Beauchamp, market analyst at IG Index, said.

The U.S. Federal Reserve will release its policy statement at 1800 GMT, following which Fed Chairman Ben Bernanke will field questions at a news conference.

Markets expect the Fed to maintain its $85 billion monthly bond-buying stimulus effort but they will closely monitor Bernanke's comments for signals on how long the policy will continue.

"The rhetoric will change at some point but we need to see some good solid growth numbers at the same time. I don't think they are going to spook the market by suggesting that QE is going to be withdrawn any earlier than the original guidance from them," Mike Allen, fund manager at Momentum, said.

Providing support was optimism that European policymakers would contain Cyprus's financial crisis after lawmakers there voted down a rescue plan.

The European Central Bank said after the vote it remained committed to providing liquidity within certain limits.

"I think the market thinks that this is very much a Cyprus specific event and that the risk contagion to places like Italy and Spain is very small," Momentum's Allen said.

British finance minister George Osborne's budget statement failed to spark much reaction from the equity market, though strength was seen from UK housebuilders after he announced a new plan to help struggling home buyers.

Barratt Developments posted the strongest gains, ahead 6.6 percent, while Taylor Wimpey, Redrow, Bellway and Persimmon added 4-6.1 percent, helping prop up the FTSE 250, which saw a flat close. (Reporting by Tricia Wright, additional reporting by David Brett; editing by Ron Askew)

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