UK's FTSE advances, but investors jittery before Fed decision

Wed Jan 29, 2014 7:34am EST

* FTSE 100 up 0.2 pct

* Unease as Fed expected to scale back stimulus

* Miners rally after positive company news

By Tricia Wright

LONDON, Jan 29 (Reuters) - Gains from miners on positive corporate news underpinned Britain's top shares on Wednesday, though caution remained before a decision by the U.S. Federal Reserve on whether to continue trimming its bond-buying programme.

Investors have been on edge in the past days as unease about the pace of Chinese growth and the withdrawal of U.S. monetary stimulus has spread from emerging market currencies to the world's big stock markets.

A huge rate hike by Turkey's central bank to defend its currency sparked a rally in global stocks earlier in the day, but these gains tailed off as initial strength in the lira faded and investor attention switched to the conclusion of the Fed's two-day policy meeting later on Wednesday.

"I think the prospect of the tapering of the Federal Reserve's massive stimulus programme, clearly in the short term that's creating nervousness, it's creating volatility," said Barclays strategist Henk Potts.

"We expect them to announce a further reduction of $10 billion from that programme today, and for that programme to be finished by the end of the year, (but) continue to believe that... actually it's a long-term positive for the global economy and financial markets."

The FTSE 100 was up 11.05 points, or 0.2 percent, at 6,583.38 points by 1213 GMT, well off an intra-day high of 6,645.23. The index had risen 0.3 percent on Tuesday after a sharp drop of around 4 percent seen in the previous three sessions as emerging market currencies weakened.

The mining index gained 1.5 percent, helped by a 6.7 percent jump to the top of the FTSE 100 by Chilean miner Antofagasta, which posted record full-year copper production and said its cash costs for this year would be in line with 2013.

Anglo American, meanwhile, notched a 5 percent rise after unveiling a better than expected rise in iron ore production in the fourth quarter.

Technical analysts were bearish on the FTSE 100.

"I wouldn't be entirely surprised if it were to make another attempt to break further lower given the extent of the (recent) sell-off," Gain Capital technical analyst Fawad Razaqzadaat said. "Nevertheless, there is strong support seen around 6,500 which could limit the downside in the near term."