LONDON (ShareCast) - A decline in risk appetite meant that UK markets were in the red on Wednesday morning ahead of the all-important policy decision from the Federal Reserve due out later this evening.

"Attention is firmly on the Fed’s monetary policy decision and press conference later, with investors clearly concerned that any hints at tapering in the coming months could mark the end of the rally that has seen equity indices reach all time highs this year," said Market Analyst Craig Erlam from Alpari.

Equity markets have been extremely choppy over the past month, falling sharply after hitting multi-year highs in May, after Chairman Ben Bernanke suggested that a 'tapering' of quantitative easing (QE) could be on the cards.

Erlam said that the market reaction has "clearly highlighted that the Fed’s QE3 program is having a much greater impact on the markets than some would like to admit.

"If Bernanke hints at tapering in the coming months again today, we could see further selling in the weeks and months ahead."

FTSE 100: Ex-div stocks weigh on markets

Utilities giants Severn Trent and United Utilities were heavy fallers today after going ex-dividend, along with real estate group Land Securities.

Temperature control and power solutions firm Aggreko was in the red after UBS cut its rating for the stock from 'buy' to 'neutral' and lowered its target price from 1,975p to 1,850p, saying the company faces headwinds next year.

Mining stocks were also providing a drag on markets this morning as risk appetite declined ahead of the Fed decision: Polymetal, Fresnillo, Vedanta, ENRC and Randgold were among the worst performers.

As such, defensive sectors were among the better performers today: supermarket giants Tesco and Sainsbury rose strongly, followed by beverages group Diageo and consumer products group Unilever.

FTSE 250: Imagination Tech rebounds strongly after poor start

Processor technology group Imagination Technologies was trading in the blue by midday despite a near-8.0% slump early on after its annual results. Full-year revenues grew by a fifth after a better-than-expected increase in unit shipments, but profits fell due to a jump in opex and continuing struggles at its loss-making radio division, Pure. The company assured that it is "building a platform for growth" after its substantial investments last year.

Software products group Micro Focus International surged after its annual results, as it reported a 5.1% gain in pre-tax profit as it kept a tight rein on costs.

House building company Berkeley Group also impressed after reporting a 26% hike in annual pre-tax profit and issued a further interim dividend following strong demand in London and the South of England.

Translation and communications software firm SDL was also a strong performer this morning, though it was rebounding after a 30% drop on Tuesday after a profit warning.


FTSE 100 - Risers
BAE Systems (BA.) 403.00p +1.84%
Tesco (TSCO) 341.35p +1.62%
Diageo (DGE) 1,912.00p +1.38%
Associated British Foods (ABF) 1,760.00p +0.98%
Wolseley (WOS) 3,156.00p +0.80%
SABMiller (SAB) 3,266.50p +0.72%
Sainsbury (J) (SBRY) 375.30p +0.70%
British Sky Broadcasting Group (BSY) 795.50p +0.57%
Intertek Group (ITRK) 3,100.00p +0.42%
Unilever (ULVR) 2,669.00p +0.41%

FTSE 100 - Fallers
United Utilities Group (UU.) 699.50p -3.72%
Aggreko (AGK) 1,692.00p -3.42%
Severn Trent (SVT) 1,714.00p -2.89%
Polymetal International (POLY) 621.50p -2.59%
Tate & Lyle (TATE) 814.00p -2.52%
Fresnillo (FRES) 1,048.00p -2.33%
Vedanta Resources (VED) 1,160.00p -2.19%
Eurasian Natural Resources Corp. (ENRC) 224.80p -2.09%
Aberdeen Asset Management (ADN) 396.30p -2.05%
Randgold Resources Ltd. (RRS) 4,582.00p -1.76%

FTSE 250 - Risers
SDL (SDL) 299.90p +10.66%
Micro Focus International (MCRO) 706.50p +9.20%
Spirent Communications (SPT) 135.70p +4.06%
Berkeley Group Holdings (The) (BKG) 2,233.00p +3.43%
Euromoney Institutional Investor (ERM) 1,025.00p +3.17%
Informa (INF) 492.70p +3.14%
Imagination Technologies Group (IMG) 311.90p +2.20%
Home Retail Group (HOME) 132.60p +2.08%
UBM (UBM) 680.00p +1.87%
TR Property Inv Trust (TRY) 201.50p +1.51%

FTSE 250 - Fallers
Hochschild Mining (HOC) 196.60p -5.21%
Telecity Group (TCY) 963.50p -3.55%
Playtech (PTEC) 616.50p -3.37%
Electrocomponents (ECM) 248.00p -3.16%
Lancashire Holdings (LRE) 760.00p -2.88%
Great Portland Estates (GPOR) 527.50p -2.68%
PayPoint (PAY) 1,029.00p -2.65%
Petropavlovsk (POG) 140.00p -2.64%
AZ Electronic Materials SA (DI) (AZEM) 315.50p -2.35%
3i Infrastructure (3IN) 132.80p -2.35%

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