Britain's FTSE 100 edges up before Fed, volumes low
* FTSE 100 up 0.2 pct
* Still eyeing first December fall in 11 years
* Centrica leads gainers, retailers lag
By Toni Vorobyova
LONDON, Dec 18 (Reuters) - Britain's main equity index crept up in thin trade on Wednesday, with Centrica lifted by its plans for a share buyback but with the broader market cautious before what is seen as a tight policy decision by the U.S. Federal Reserve.
Strong U.S. data, including Wednesday's forecast-beating housing starts, has fuelled expectations that the Fed could scale back its equity-friendly stimulus as soon as this month. That in turn has weighed on global stocks.
As a result, Britain's FTSE 100 - whose companies make a quarter of their sales in the United States - has fallen for six weeks.
That is its longest downward run since 2008 and leaves it on track for its first December loss in over a decade.
Nevertheless, most economists still do not expect the Fed to move before early 2014, and some investors cautiously bought back into the market on Wednesday ahead of the 1900 GMT announcement.
"If they taper, and that tends to be the minority view, ... I think the impact on equities will probably be a little more negative (than on bonds), simply because the equities markets haven't priced it in. They could go down 5 percent, I don't think we'll see much more than that," said Michael Hewson, senior market analyst at CMC Markets.
"It will be a buying opportunity if markets do go down, as long as the Fed manages its guidance loquaciously. The whole point of tapering is that the economy's improving."
The FTSE 100 was up 15.80 points, or 0.2 percent, at 6,501.99 points by 1539 GMT, its gains stunted by tough technical resistance around the 200-day moving average.
Subdued volumes, however, underscored investor caution, with activity on the FTSE 100 at just 56 percent of the 90-day daily average with less than hour to go before the close.
Centrica was a top gainers, up 2.8 percent after the energy company said it would sell its Texas gas-fired power stations and use the money to extend its share buyback.
"As we have long advocated, an extension of the share buy-back scheme - especially at the current prices - could bring better shareholder returns," analysts at Liberum Capital said.
On the downside, retailers were among the top fallers as broker notes raised concerns about the strength of Christmas sales and highlighted Kantar data showing major supermarkets losing market share to discount grocers.
"The retailers seem to be struggling a bit with fears over Christmas shopping, we've all seen the discounts out there," said James Humphreys, deputy head of research at Duncan Lawrie Private Bank. "We think retail in general is a difficult place to invest at the moment, and you need to be very stock specific just because consumer habits are changing so rapidly."
Sainsbury dropped 2.8 percent and Tesco lost 1.4 percent. Marks & Spencer fell 2.3 percent, also hit by analysts at UBS downgrading the stock to 'neutral' from 'buy' and forecasting lower gross margins.
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