By Simon Kennedy
LONDON (MarketWatch) -- U.K. stocks were mostly lower Wednesday
as investors awaited a review of government spending, though gains
for some mining companies helped limit losses for the benchmark
index.
The U.K.'s FTSE 100 index dropped 0.2% to 5,694.17 as other
European markets also lost ground.
The move came as the country awaited details of the government's
plan to cut spending by 83 billion pounds ($130 billion) over the
next four years. Chancellor of the Exchequer George Osborne, who
will announce the plan at 7:30 a.m. Eastern time, faces a delicate
balancing act as he tries to eliminate the nation's structural
deficit without slamming the brakes on the economy. See full story
on the U.K.'s planned cuts.
It also followed the release of the minutes from the October
meeting of the Bank of England's interest-rate-setting
committee.
The minutes showed a three-way split between members of the
committee, with seven voting to leave both interest rates and asset
repurchases unchanged. One member called for an increase in the
bank's quantitative-easing program, while another wanted interest
rates to be raised by a quarter-point.
The bank said some of its members felt there was an increased
likelihood that further monetary stimulus would be necessary, but
that "the evidence was not sufficiently compelling to imply that
such a course of action was necessary at present."
Among stocks on the move Wednesday, shares in oil and gas
companies were lower, with BG Group dropping 2.5% and BP PLC (BP)
down 1.3%.
Mining giants BHP Billiton (BHP) and Rio Tinto (RIO) helped
partially offset that impact on the FTSE as they both rose
0.8%.
The moves came after BHP Billiton reported a 6% rise in iron-ore
production and also followed a report in The Wall Street Journal
that the firm's $39 billion bid for Potash Corp. of Saskatchewan
(POT) is expected to be rejected by the Saskatchewan government.
See story on BHP.
Separately Rio Tinto announced it would invest $3.1 billion to
boost its iron ore-production in Australia.
Among mid-cap companies, shares in Hansen Transmissions
International slumped nearly 19% after the company slashed its
revenue forecast for the year.
The group, which makes gearboxes for wind turbines, said revenue
for fiscal 2011 will fall around 10% as customers delay deliveries.
It had previously expected revenue to rise between 5% and 10%.
Transport and logistics company Stobart Group was another big
faller in the mid-cap FTSE 250 index. The stock dropped 8.3% after
it trimmed its profit forecast for the fiscal year amid rising
finance costs and concerns that an increase in the rate of value
added tax could hurt its volumes.