Britain's FTSE on slow burn towards Fed tapering
* FTSE 100 down 8.77 points at 6,491.22
* Miners fall, Glencore down ahead results
* Shire rises on M&A talk
By David Brett
LONDON, Aug 19 (Reuters) - Britain's top shares were largely unmoved early on Monday, with the market continuing to drift as it awaits the impact of possible stimulus withdrawal in the United States.
A light economic calendar and strong short-term technical support also did little to help the market breakout of its current range.
The UK's FTSE 100 was down 8.77 points at 6,491.22 0721 GMT. The index has been locked in a 250-point range since the start of July.
In the short-term analysts said support would be found at the 50-day moving average, around 6,450 and below that on the way down around 6,400, previously resistance, followed by the 200-day moving average, currently at 6,295.
Traders said there is unlikely to be too sharp a move either way until September's meeting of the Federal Reserve.
"The latest unemployment numbers and strength from the U.S. economy is fuelling speculation that Federal Reserve stimulus measures will be tapered as soon as next month," Mark Ward, head of trading at Sanlam Securities.
"As traders begin to return from their summer holidays, September could prove to be interesting if investors dip their toes in to take advantage of the recent weakness," he said.
Yields across government bonds globally have been rising ahead of the expected wind down in stimulus in the United States with UK gilt yields at 2-year highs.
Despite rising yields eroding some of the attractiveness of stocks Mislav Matejka, strategist at JP Morgan, said potential further increases in yields can be tolerated by equities.
"Higher bond yields are helping to broaden the market leadership and are facilitating an asset allocation shift away from fixed income," he said in a note.
Industrial metals up 25 percent, miners rising 7.7 percent and forest and paper climbing 5.7 percent have all been the market leaders over the last month, with the likes of higher yielding telecom sectors among the laggards.
"We think the valuation cushion is still substantial," Matejka said.
Miners were the main drag on the FTSE 100 as traders banked profits on a sector which has been a big outperformer over the last 30 days.
Miner Glencore Xstrata fell 1.5 percent ahead of first-half earnings due out on Tuesday in which it is expected to write down the value of assets inherited from Xstrata by as much as $7 billion.
Top gainer on the FTSE 100 on early on Monday was drug firm Shire, which climbed 3 percent on a report in Sunday Times that the company has hired Lazard to beef up its team of advisers as foreign predators prepare to pounce, traders said.
M&A was a big feature among the mid caps too as British engineer Kentz leapt 25 percent after rejecting takeover approaches from larger London-listed rival AMEC and German group M+W Group, saying both undervalued the company. (Reporting by David Brett; Editing by Toby Chopra)
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