FTSE investors press pause ahead of Fed meeting

Britain’s FTSE 100, which has rallied strongly so far this year, started Wednesday trading flat as investors paused for thought ahead of the US Federal Reserve’s policy-setting meeting and a string of important economic data.

Amid a growing debate about whether markets can continue pushing higher or are due a correction, the UK benchmark index stood firm at 6,340, unchanged after yesterday’s rally. European markets were similarly little changed – unmoved by a report showing the Spanish economy shrunk for a sixth straight quarter – despite strength on Asian and US markets, with the Dow Jones Industrial Average scaling a five-year high on strong corporate earnings.

In currency markets, the British pound was down yet again, off 0.1% against the dollar to $1.5744 and down 0.2% against the euro to €1.1661.

Miners hold FTSE back

Miners held the FTSE back, reversing yesterday’s gains, with Petrofac (PFC.L) down by 7.5% to 1,696p and Antofagasta (ANTO.L) lower by 4% at 1,218p.

Imperial Tobacco (IMT.L) was trading lower after reporting net revenues of just 2% in the last three months of 2012, with volumes down 1%. ‘Market trends have worsened in a number of key markets including in the EU and Russia,’ the group reported.

Analysts at Nomura listed the reasons why the tobacco blue chip could be in for a ‘de-rating’, including: ‘top-line focus falling short, margin pressures owing to cost of increased investment, western European exposure where conditions are worsening.’

WPP & UU compete for top spot

At the other end, WPP (WPP.L) was among the top risers, with shares up 1.1% to 748p after Jefferies analysts raised the shares to a ‘buy’ after an ‘analysis of WPP's largest clients and their 2013 ad budgets’.

Water company United Utilities (UU.L) was 1% higher to 748p after reporting an in-line interim management statement. Angelos Anastasiou of Seymour Pierce said the statement was as expected and ‘UU remains the least expensive of the Waters’.

Computer chip designer Imagination Technologies (IMG.L) was also having a good day, up 7.7% to 475p as Morgan Stanley raised the shares from ‘equal-weight’ to ‘overweight’

Investors are now looking ahead to the meeting of the Federal Reserve’s FOMC, which decides on US monetary policy, as well as data on US economic growth in the last three months of 2012.