FTSE jolted lower by miners, Fed stimulus uncertainty
* FTSE 100 down 1 percent
* Miners extend falls after recent gains, metal price dip
* Expected trimming of Fed stimulus knocks sentiment
By Tricia Wright
LONDON, Aug 20 (Reuters) - Britain's blue chip shares fell on Tuesday, led lower by heavyweight miners, while rising expectations for a scaling back of the U.S. Federal Reserve's stimulus programme continued to dampen investor sentiment.
Mining stocks took most points off the blue-chip index. The sector fell 2.9 percent, extending falls on Monday, as declines in metals prices prompted investors to lock in profits on the sector, up around 15.5 percent from an early July trough.
According to Thomson Reuters Datastream, the STOXX 600 Basic Resources index has seen its 12-month forward price/earnings ratio rise to about 12.2 times from around 9.4 times over that period.
Glencore Xstrata shed 3.3 percent after it wrote down assets inherited from Xstrata by $7.7 billion as it posted a 9 percent drop in core profit. BHP Billiton missed forecasts with a 15 percent fall in second-half profit, sending its shares down 3.4 percent.
The FTSE 100 was down 66.06 points, or 1 percent, at 6,399.67 points by 0732 GMT, ploughing through its 50-day moving average, at 6,454, on mounting expectations that the Fed will start scaling back stimulus as soon as next month.
Traders said there was scope for volatility on the index going into September's Fed meeting. Minutes of the Fed's July meeting, due out on Wednesday, could give clues on whether it is ready to start trimming its asset purchases next month.
"Investors (are running) for cover this morning as the markets price in high probability that the Fed will start to rein in their stimulus programme in September," Mike McCudden, head of derivatives at Interactive Investor, said.
"On lighter volumes we could be in for some seriously choppy sessions going in to September as investors continue to speculate where the Fed will go from here."
GFT Markets technical analyst Fawad Razaqzada said that the near-term path continues to be on the downside until the market manages to close above 6,640.
He reckoned that the index was heading towards 6,400, previously resistance, followed by the 200-day moving average at 6,295. (Editing by Susan Fenton)