By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- London's FTSE 100 index moved cautiously
lower at the open on Wednesday ahead of a busy day in the U.K, with
the release of unemployment data, the latest Bank of England
minutes and the U.K. government's budget for the coming year.
The benchmark fell 0.2% to 6,594.11, paring back after a 0.6%
advance on Tuesday.
Posting one of the biggest losses in the FTSE, shares of Smiths
Group PLC slid 5% after the engineering company said profit fell in
the first half of its fiscal year, but that it expects improved
trading in the second half.
Shares of HSBC Holdings PLC (HSBC) gave up 1% after Credit
Suisse cut the banking heavyweight to underperform from outperform.
The analysts said they were disappointed the group hasn't been able
to capitalize on its strengths "in terms of funding, liquidity and
exposure to global trade." Instead, the Credit Suisse analysts
prefer Standard Chartered PLC in the U.K./Asian banking space.
Standard Chartered shares slipped 0.1%.
Also declining, Antofagasta PLC slumped 5.6% after Credit Suisse
cut the miner to underperform from neutral.
More broadly in the U.K., investors waited for a trio of
political and macroeconomic events. At 9:30 a.m. in London, or 5:30
a.m. Eastern Time, the U.K. unemployment rate for the three months
to January is out, expected to show no change at 7.2%. That means
the "old" Bank of England forward guidance from August stays in
place, as the 7% threshold for considering a rate hike won't be
reached.
Also at 9:30 a.m. in London, the minutes from the BOE's March
meeting are published. Economists expect all nine of the central
bank's policy makers voted unanimously to keep interest rates at a
record low of 0.5% and maintain QE at 375 billion pounds ($622
billion).
Later in the day, U.K. Chancellor of the Exchequer George
Osborne presents his annual budget to the House of Commons. Markets
will be looking for new growth and deficit forecasts, as well as
for spending initiatives. Osborne has hinted that the budget will
include measures to boost business investment, which is considered
a missing piece in the U.K.'s recovery. The finance minister is
further expected to confirm that spending cuts will be needed until
well after the 2015 election.
Philip Shaw, chief economist at Investec Securities, said in a
note that there are also hopes that Osborne will reveal tax cuts,
but that such hopes are likely to be dashed.
"The deficit remains at elevated levels, and major tax cuts at
the halfway point in the fiscal adjustment cycle would in our view
be completely inappropriate," he said.
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