UK's FTSE edges lower for third day running
* Ex-dividends take 10.60 points off FTSE 100
* FTSE 100 down 0.3 pct, falls for 3rd straight day
* Traders await Fed minutes due Wednesday at 1800 GMT
* Investors trim equity holdings on prospects of Fed tapering
By Sudip Kar-Gupta
LONDON, Aug 21 (Reuters) - Britain's benchmark equity index edged lower for the third consecutive day on Wednesday, as investors trimmed equity holdings on prospects of a forthcoming scaling back in U.S. monetary stimulus.
The market also took a further technical hit as a clutch of companies, including bank HSBC and Intercontinental Hotels, went ex-dividend, with those stocks falling by roughly the amount of the dividend payout.
The blue-chip FTSE 100 index was down by 0.3 percent, or 16.19 points lower, at 6,437.27 points in early session trade.
The FTSE 100 raced to a 13-year high of 6,875.62 points in late May but has since slipped back, tracking a fall in global equity markets due to expectations that the U.S. Federal Reserve may start to reduce its stimulus next month.
The Fed's monthly bond purchases, which had pushed down bond yields and led investors to seek better returns in equities, have driven much of the global equity rally this year.
However, bond yields have risen over the last month due to the prospect that the Fed may start to slow the pace of those purchases next month, and the publication of minutes from the Fed's July meeting later on Wednesday may give further clues over its future policy.
"There is a bit of caution going into tonight. At the moment, the market's looking like it's in a bit of a corrective phase," said Central Markets strategist Richard Perry.
Perry said the FTSE could fall back down this month to the 6,400 point level - a previous low point in August at which the index found some buying support.
Despite the retreat from the peak level reached in May, the FTSE is still up 9 percent since the start of 2013, and Citi strategists said they preferred the UK market to the continental European one, with investors encouraged by signs of an economic recovery in Britain.
"As our European equity strategists have pointed out, UK equity returns are now ahead of bond returns over 1, 2, 3, 5, 10, 20 and 25 years," wrote the Citi strategists in a note. (Editing by Toby Chopra)
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