FTSE preview: Budget day nerves hit shares
The FTSE 100 is expected to fall after losses on Wall Street and in Asia, with investors awaiting the government's 2011 Budget for direction.
Eye on the market: Traders will react to Budget news.
The British blue-chip index was seen falling as much as 0.4% after it closed down 23.38 points, or 0.4% on Tuesday at 5,762.71, snapping a three-day winning streak which had seen it rally 2.9%. The index is down 3.9% in March.
Asian shares retreated on Wednesday, following falls on Wall Street, with Tokyo's Nikkei shedding more than 1% as investors worried about Japan's nuclear crisis, the violence in Libya, and further unrest in the Middle East.
On the domestic front, the budget statement, to be delivered at 12.30, will see Britain's coalition government seeking to bolster a faltering economy without compromising its austerity programme.
Finance minister George Osborne will have limited room for manoeuvre, however, having already introduced a raft of tax rises and spending cuts in the months since the coalition government took power last May.
Ahead of the Budget, minutes from the Bank of England Monetary Policy Committee's February meeting will be published, with investors keen to see whether the number of committee members voting for a rate rise rose in the face of the spiralling inflation data.
In January, an additional MPC member voted for a rate hike, taking the split against raising rates to 6-3, with this pattern expected to have continued in February.
Across the Atlantic, February US new home sales should be the main economic focus on Wednesday, with the latest weekly mortgage and refinancing indexes released beforehand.
Ex-dividend factors will knock 2.2 points off the FTSE 100 index on Wednesday, with Aviva, InterContinental Hotels, and Schroders all trading without their dividend attractions. Technical analysis of the FTSE 100 index remained cautious.
'Given the main range of 5,505.00 to 5,813.81, the current chart pattern suggests the start of a correction to 5,662.00 to 5,625.00,' said James A. Hyerczyk, analyst at Autochartist.
'Holding this level will be a strong indication that the final bottom was reached last week at 5,505.00. A failure to hold this retracement zone will mean that this week's rally was merely short-covering and that lower prices are to follow,' Hyerczyk said.
There will be updates today from Sainsbury, Smiths Group, Eurasian Natural Resources,
Rio Tinto's chief executive, Tom Albanese said increased government involvement in the resources sector is constraining efforts to meet demand across the globe, and slammed what he called the 'curse of resource nationalism' in a speech at the Credit Suisse Asia Investment Conference in Hong Kong on Wednesday.
Also, Rio Tinto said on Tuesday that it has received acceptances on 35.89% of shares in Riversdale Mining for its A$3.9bn takeover offer.
BG Group has stopped major gas pipeline work for its $15bn Queensland Curtis Island coal seam gas to LNG project because some of its environmental management plans had not been approved.
Anadarko Petroleum said on Tuesday it will buy BP's interest in a natural gas processing plant in Colorado for $575.5m.
Also, BP's Canadian gas liquids business, which it put up for sale last year as part of a slate of global asset sales, could be worth C$2.3bn ($2.35bn) and domestic companies are likely bidders, an analyst said on Tuesday.
HSBC is sounding out its shareholders over a proposed shake-up of its pay plans that would see top executives assessed on a wider range of performance metrics, the Financial Times reported on Wednesday.
Lloyds Banking Group's new chief executive Antonio Horta-Osorio has reassembled his original executive team from Santander UK with the appointment of Alison Brittain, the Spanish lender's head of retail banking, The Daily Telegraph said.
Vodafone's Netherlands unit is to acquire Dutch mobile phone's retailer Belcompany from the Macintosh Retail Group for €120m, adding 210 stores to the firm current total of 86 in the Netherlands, the group said in a statement after the close on Tuesday.
There will be updates today from Sainsbury, Smith Group, Eurasian Natural Resources and Capital & Regional.
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