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FTSE preview: US Fed gloom hits shares

By Reuters
Updated: 02:55 EDT, 8 June 2011

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The FTSE 100 is seen opening down 17-29 points, or 0.5%, tracking falls in Asia after a late downturn on Wall Street following cautious comments from US Federal Reserve Chairman Ben Bernanke.

Wednesday: Ex-dividend factors will trim 0.4 points off the FTSE

In a speech on Tuesday, Bernanke acknowledged that there was a slowdown in the US economy but offered no indication that new stimulus measures were on the cards.

US blue-chips extended their losing streak into a fifth day on Tuesday amid mounting concerns about the economy, reversing course to turn negative after Bernanke started speaking.

Asian stocks fell on Wednesday, while the dollar sagged after the uninspiring comments from the Federal Reserve Chairman.

The UK blue-chip index closed up 1.49 points, or 0.03%, on Tuesday at 5,864.65, ending marginally higher for a third straight session as technical factors held sway.

"From a short-term perspective, the current struggling rally could be indicating that short-sellers may not wait for a test of the upside retracement zone before initiating new positions," said James A. Hyerczyk, analyst at Autochartist.

"Looking at the short-term rally from 5,802.67 to 5,890.58, it is possible that the FTSE is already setting up for a corrective move to 5,846.63 to 5,836.25. Any close below this zone will indicate more downside pressure," Hyerczyk added.

No British economic data is due for release on Wednesday and there is little due across the Atlantic apart from the weekly US mortgage and refinancing indexes and the latest Fed Beige Book, after London's close.

Ex-dividend factors will trim 0.4 points off the FTSE 100 index on Wednesday, with Associated British Foods and Johnson Matthey losing their payout attractions.

Cairn Energy expects to find out later on Wednesday whether a lawsuit designed to deter environmental protesters from disrupting its Arctic drilling campaign has been successful.

Rio Tinto Alcan sees strong demand for aluminium in all sectors, but remains cautious about its medium-term outlook because of the high level of the inventories in London Metal Exchange warehouses, its chief executive Jacynthe Cote said in an interview on Tuesday.

Eurasian Natural Resources will begin a review of its board with the aim to cut the number of directors from 14 to eight, Britain's Times newspaper reported on Wednesday.

IAG-owned British Airways said on Tuesday it will pay $89.5m to settle a class-action lawsuit accusing it and more than two dozen other airlines of conspiring to fix the price of air-cargo freight shipping.

There will be updates today from Smith Group, Sthree, Punch Taverns, Servoca, Gooch & Houseco, GB Group, Hyder Consulting and Dolphin Capital.

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