LONDON (ShareCast) - (ShareCast News) - The UK equity market declined on Monday after earlier gains as investors showed nervousness ahead the Federal Reserve's interest rate decision.
The Federal Open Market Committee on Thursday announces whether it will raise rates for the first time in almost a decade following a two-day policy meeting. While some analysts see a possible 25-basis-point increase, others say pressures on global markets from concerns about the impact of China's slowdown will stop the Fed from taking action.

Connor Campbell, financial analysts at Spreadex, said there was "market-confusing mist surrounding the Fed's current position in regards to a September rate-hike".

"Tomorrow afternoon could help provide some much needed clarity, as the US releases its Empire State manufacturing index, industrial production and retail sales figures; then again it could not, with analysts expecting another muddled set of numbers," he added.

The debate on an interest rate hike by the Bank of England also continued to intensify as policymaker Martin Weale said they must rise "relatively soon".

Weale said an increase in rates would give the central bank more leeway to make cuts in the event of another financial crash.

"With wage growth remaining firm, the tightening labour market means that inflation is likely to rise above target in two to three years' time," Weale wrote in an article for The Scotland on Sunday newspaper.

"Policy needs to be set with reference to this, rather than the current rate of inflation. As a result, it seems likely to me that the Bank Rate will need to rise relatively soon."

Meanwhile, China remained in focus after worse-than-expected data on factory output offset better-than-forecast retail sales.

The National Bureau of Statistics said industrial production rose 6.1% in August compared to a year ago, falling short of analysts' expectations for a 6.5% increase and following the previous month's 6% gain.

Retail sales climbed 10.8% in August, more than the forecast for a 10.6% rise and a 10.5% jump a month ago.

China on Sunday outlined plans to restructure its state-owned enterprises, including partial privatisation. The proposal included cleaning up and integrating some state firms, Xinhua news agency reported. However the guidelines, jointly issued by the Communist Party's Central Committee and the State Council, China's cabinet, did little to soothe fears on the flagging economy.

"With investors still unsure about what is going on with respect to the Chinese economy after last week's much weaker than expected inflation data, there is still an expectation that Chinese authorities will have to take further steps to ease monetary policy further in the coming weeks, and it is this, along with a weaker Chinese currency, that is fuelling concerns that we could see China export further deflationary price pressures into the global economy in the coming months," said Michael Hewson, chief market analyst at CMC Markets.

In company news, ARM Holdings was on the front foot as Morgan Stanley predicted encouraging news may emerge about capital returns at the microchip architect's analyst day next week.

Retailers including Morrison Supermarkets, Marks & Spencer and J Sainsbury were top fallers after the British Retail Consortium reported declines in August sales at high street and shopping centres.

The Royal Bank of Scotland reversed an earlier rise following reports the lender hired Bank of America Merrill Lynch to prepare a spin-off of its Williams & Glyn-branded retail branches in the second half of 2016.

Trinity Mirror jumped after saying it was in talks to buy out the shares it does not already own in rival Local World Holdings Ltd.

Chemring Group surged as the protection solutions provider reiterated full-year expectations after reporting a sharp rise in revenue.

Shire dropped as the pharmaceutical company is reportedly mulling options to sweeten its multi-billion dollar, all-stock offer for US biotechnology group Baxalta by putting cash into shareholders' hands sooner.

A measure of mining stocks rallied, including Rio Tinto and BHP Billiton, as JP Morgan upgraded its stance on the European mining and energy sectors. JP Morgan said the risk/reward is improving as the sector is the worst performer year-to-date, down almost 30% in absolute terms. It also said the impact of the Fed's move on Thursday could end up being positive for financial markets.

Market Movers

techMARK 3,066.48 -0.28%

FTSE 100 6,098.59 -0.31%

FTSE 250 16,944.46 -0.14%



FTSE 100 - Risers

BHP Billiton (BLT) 1,074.00p +1.56%

ARM Holdings (ARM) 948.00p +1.50%

International Consolidated Airlines Group SA (CDI) (IAG) 591.50p +1.37%

Hargreaves Lansdown (HL.) 1,183.00p +1.28%

Rio Tinto (RIO) 2,409.50p +1.11%

Carnival (CCL) 3,420.00p +1.03%

RSA Insurance Group (RSA) 510.50p +0.89%

Mondi (MNDI) 1,479.00p +0.82%

Inmarsat (ISAT) 1,029.00p +0.68%

Barratt Developments (BDEV) 658.00p +0.61%



FTSE 100 - Fallers

Glencore (GLEN) 128.20p -4.19%

Morrison (Wm) Supermarkets (MRW) 158.30p -4.18%

Marks & Spencer Group (MKS) 493.50p -2.28%

Antofagasta (ANTO) 594.50p -2.14%

Capita (CPI) 1,198.00p -1.64%

Ashtead Group (AHT) 993.00p -1.59%

Sainsbury (J) (SBRY) 229.80p -1.54%

Tesco (TSCO) 178.65p -1.49%

Lloyds Banking Group (LLOY) 74.67p -1.46%

Standard Chartered (STAN) 705.70p -1.41%



FTSE 250 - Risers

Acacia Mining (ACA) 244.50p +3.43%

Evraz (EVR) 70.85p +2.98%

Betfair Group (BET) 3,114.00p +2.98%

Euromoney Institutional Investor (ERM) 1,029.00p +2.69%

Riverstone Energy Limited (RSE) 970.00p +2.65%

Investec (INVP) 530.00p +2.61%

Man Group (EMG) 164.80p +2.11%

Polar Capital Technology Trust (PCT) 558.00p +2.10%

Henderson Group (HGG) 264.40p +1.97%

Vedanta Resources (VED) 520.50p +1.86%



FTSE 250 - Fallers

Lonmin (LMI) 21.00p -6.00%

Kaz Minerals (KAZ) 153.40p -5.19%

Vectura Group (VEC) 175.10p -3.53%

Keller Group (KLR) 941.50p -3.24%

Home Retail Group (HOME) 133.10p -2.92%

Vesuvius (VSVS) 383.10p -2.79%

Bodycote (BOY) 613.00p -2.70%

AO World (AO.) 149.30p -2.42%

Synergy Health (SYR) 1,560.00p -2.38%

Hunting (HTG) 405.60p -2.27%



FTSE TechMARK - Risers

Triad Group (TRD) 36.00p +5.11%

Dialight (DIA) 638.00p +2.90%

BATM Advanced Communications Ltd. (BVC) 18.38p +0.68%

Skyepharma (SKP) 359.00p +0.56%

NCC Group (NCC) 257.00p +0.39%



FTSE TechMARK - Fallers

Oxford Instruments (OXIG) 590.00p -6.35%

Oxford Biomedica (OXB) 8.44p -2.99%

SDL (SDL) 360.50p -2.17%

Ricardo (RCDO) 880.00p -2.11%

Spirent Communications (SPT) 76.50p -1.92%

KCOM Group (KCOM) 91.50p -1.35%

Sepura (SEPU) 178.50p -1.11%

CML Microsystems (CML) 350.00p -0.71%

XP Power Ltd. (DI) (XPP) 1,575.00p -0.63%

E2V Technologies (E2V) 246.00p -0.10%

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