Petrofac falls as UK's FTSE 100 retreats

Tue Dec 17, 2013 6:38am EST

* Equity markets back off before Fed meeting

* Petrofac hit by rival CGG's profit warning

* Pullback is chance to buy on the dip -JNF trader

* FTSE to end 2013 in 6,700-6,900 range -JNF trader

By Sudip Kar-Gupta

LONDON, Dec 17 (Reuters) - Britain's main equity index fell on Tuesday as uncertainty over U.S. monetary policy weighed on the market. Oil-services group Petrofac was hit by a rival's profit warning.

The blue-chip FTSE 100 index slipped by 0.4 percent, or 23.29 points, to 6,498.91 points in mid-session trading, retreating from Monday's 1.3 percent rise.

Petrofac fell 2.4 percent, making it one of the FTSE's worst-performing stocks. Traders said a profit warning at French rival CGG was hitting oil-services stocks.

In general, traders were erring on the side of caution before the two-day U.S. Federal Reserve meeting due to start later on Tuesday. The Fed may start to scale back an economic stimulus programme that has driven much of this year's global equities rally.

A majority of investors and economists still expect the Fed to wait until March 2014 to begin winding down its "quantitative easing." But stronger-than-expected U.S. economic data, along with last week's budget deal in Washington, have led some to speculate the Fed may act this week.

"People have taken some gains off the table prior to the Fed meeting," said JNF Capital trader Rick Jones.

However, Jones feels the retreat is a chance to buy stocks cheap. He expects equity markets to rise again in 2014 as the global economy recovers from the 2008 financial crisis.

"We've had a bit of a pullback this morning but we're actively buying into the dip," he said.

Jones expects the FTSE 100 to 2013 in the 6,700-6,900 point range, with the FTSE still up around 10 percent since the start of 2013.

Gain Capital technical analyst Fawad Razaqzada said technical analysis charts pointed to more near-term weakness for the FTSE 100, but he saw buyers stepping in if the FTSE 100 fell to 6,460 points.