By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Banks lifted the U.K.'s benchmark stock
index into positive territory on Wednesday, offsetting weakness for
miners, as investors waited for the U.S. Federal Reserve's policy
decision later in the day.
The FTSE 100 gained 0.1% to 6,577.02, after losing 0.8% on
Tuesday.
The subtle move came as investors were hesitant of making any
big moves ahead of the much anticipated monetary policy decision
from the U.S. Federal Reserve out at 7 p.m. in London, or 2 p.m.
Eastern Time.
Analysts expect the central bank to announce a reduction of $10
billion to $15 billion to its $85 billion-a-month bond-buying
program after signs the economy has improved. Read: How stocks may
react to the Federal Reserve decision
The Bank of England was also in the spotlight after saying the
nine members of its Monetary Policy Committee earlier in September
voted unanimously to keep both interest rates and the
asset-purchase program unchanged. The interest rate was kept at a
record low 0.5%, while the quantitative-easing program stayed at
375 billion pounds ($596.48 billion).
"A key question concerned whether there was any serious
consideration of reopening the asset purchase program, given that
interest-rate markets have continued to price in a still more
aggressive series of rate increases since forward guidance was
introduced last month," said Philip Shaw, chief economist at
Investec Securities, said in a note.
"There was relatively little here. The committee did not make a
comment to the extent that the shape of the yield curve was
unwarranted (as it has previously)...Its conclusion was that 'were
the recovery to falter, the case for further asset purchases would
be stronger,'" he added.
The Bank of England in August laid out its forward guidance on
interest rates, saying it will keep rates low at least until the
unemployment level falls to 7%, expected in 2016. Markets, however,
have looked to recent upbeat macroeconomic releases and have
started factoring in a rate hike toward the end of 2014.
Among notable movers in London, banks helped push the benchmark
into positive territory. Shares of Barclays PLC (BCS) picked up
0.5%, Standard Chartered PLC gained 1.9%, Lloyds Banking Group PLC
rose 1.9% and heavyweight HSBC Holdings PLC (HBC) put on 1.1%.
Also on the rise, shares of Smiths Group PLC added 3.1% after
the engineering company declared a special dividend for the full
year.
Miners, however, declined in London as metals prices were mixed.
Shares of Antofagasta PLC dropped 2.2%, Rio Tinto PLC (RIO) gave up
0.7% and Vedanta Resources PLC fell 0.4%.
Shares of Fresnillo PLC lost 2.6% to 10.14 pounds after UBS cut
the price target on the silver miner to GBP11.50 from GBP12.50.
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