* FTSE 100 down 4.28 points at 6,396.96
* Defensive stocks in favour
* Volatility near 6 month highs ahead of Fed
* Aggreko falls as UBS cuts after update
By David Brett
LONDON, June 19 (Reuters) - Britain’s top shares edged lower by midday on Wednesday and investors were reluctant to make bets before U.S. Federal Reserve Chairman Ben Bernanke provides clarity on central bank policy later.
By 1031 GMT, the FTSE 100 was down 4.28 points, or 0.1 percent at 6,396.96.
London’s blue-chip index has fallen near 7 percent since mid-May, when investors began to worry that the Fed might scale back its stimulus package, leaving the outlook for global growth and corporate earnings in the balance.
While the expectation is that the U.S. continues with its asset purchase programme at least until September, investors traded cautiously ahead of Fed Chairman Ben Bernanke’s news conference due at 1800 GMT.
Defensive stocks, such as consumer staples and tobacco, rose.
“Investors have been a little bit more jittery this morning, which has been reflected by some volatile markets early in the session,” Craig Erlam, market analyst at Alpari said.
The FTSE volatility index - a gauge of investor fear and usually rises as markets fall - is near 6-month highs.
“We think (volatility) will increase in the next few months while the Fed tests the market about its exit strategy,” said Pascal Blanque, chief investment officer of Amundi.
“We’re entering into a new regime for central banks, and it’s going to be a massive shift, so it’s logical to see a rise in volatility across all asset classes.” he said.
Temporary power provider Aggreko topped the fallers list, shedding 3.2 percent after UBS downgraded its rating to “neutral” from “buy”, and cut its earnings estimates following a trading update on Tuesday.
Stocks trading without their dividends weighed on the FTSE 100 on Wednesday, with Experian, Land Securities , Severn Trent and United Utilities taking 1.8 points off the index.
Defence firm BAE Systems rose 1.8 percent after media reports of potential Gulf orders worth up to 5 billion pounds ($7.80 billion), and after the head of rival EADS left open the possibility of a tie-up, according to traders. ($1 = 0.6407 British pounds) (Reporting by David Brett; Editing by Louise Heavens)