London Lower Ahead of Fed Meeting

Ivaylo
19 Sep, 2006
New York City

There is not any huge volatility shown but volumes are low across the board and a lot of people are waiting ahead of the data and the Fed. The market also reacted negatively to a speech by the head of the International Monetary Fund in which he warned further oil price increases and global economic imbalances. British Energy led the decliners and shares in miner Kazakhmys plunged. By mid-day, the FTSE was off 44.2 points, or 0.75%.

[R]9:30AM London benchmark index falls, traders await Fed decision.[/R]
The FTSE 100 in London was trading lower by mid-day. The FTSE was off 44.2 points, or 0.75% at 5,846.0 points, retreating from earlier session highs at 5,897.4.

Decliners

British Energy led the decliners, shedding 6.6% after confirming the discovery of boiler tube cracks at two of its generators which could reduce available capacity through to 2009. Kazakhmys declined 4.3% on fears the company''s CEO, who is quitting at the end of the year, will sell his 15.6-percent stake when a lock-up agreement expires in October, as well as on concerns about the quality of the group''s results and prospects.

GlaxoSmithKline lost 2% after Bear Sterns cut the stock to underperform to reflect deteriorating competitive conditions for its diabetes drugs while GKN fell 3.65 on a UBS downgrade. Building companies were generally lower, with Wolseley falling 1.9% after a report showed U.S. homebuilder optimism sank to its lowest level in more than 15 years.

Advancers

Banking group HBOS Plc led the index advancers, gaining 1.53%, after its property fund manager Invista Real Estate, which HBOS intends to spin off, raised 103 million pounds in a share placing.

Firm oil prices around $64 a barrel helped BP and Royal Dutch Shell to counter news of operational difficulties. BP gained 0.5% despite continuing concerns over production at its Thunder Horse oil and gas field in the Gulf of Mexico, but Shell shed 0.8% after the Russian government cancelled environmental permits that would allow the company to develop the second stage of the Sakhalin-2 offshore project. BG Group added 0.7%.