LONDON (ShareCast) - UK markets gave back Tuesday’ slight gains as traders continued to take positions, or stay on the side lines, ahead of the all-important policy decision - and accompanying market reaction - from the US Federal Reserve due out later this evening.

“Bernanke has two key messages that he wants to get across. Firstly, that a small reduction in QE purchases is just that. Not a signal of any particular future path for monetary policy. Secondly, to reiterate their commitment to the same set of economic goals using the same basic tool-kit. If he can make the market believe both these things, then we should expect stocks and bonds to both rally, with inflation expectations rising and credit spreads tightening,” comments Thomas Graff, Fixed Income Portfolio Manager at Brown Advisory.

However, Mr.Graff also points out that “There is no doubt that Bernanke is walking a very thin line and the language in which he communicates changes to fiscal policy is crucial as it will set up trading patterns for the whole summer.”

In parallel, the minutes of the Monetary Policy Committee’s (MPC) last policy gathering, released today, revealed the heightened importance which wage dynamics in the UK have taken on for the Bank of England. “

“Only if activity falters, or if weak pay pressures begin to look more lasting, do we think a majority of MPC members will be persuaded to support a fresh monetary injection,” Barclays writes.

FTSE 100: Ex-div stocks weigh on markets

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

Temperature control and power solutions firm Aggreko was sideswiped by UBS; the broker 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 also provided a drag on markets 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 registered a large rise 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 operating expenditures (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, although it was in fact rebounding after a 30% drop on Tuesday after a profit warning.

FTSE 100 - Risers
Tesco (TSCO) 344.60p +2.59%
Diageo (DGE) 1,925.50p +2.09%
Sage Group (SGE) 340.00p +2.04%
BAE Systems (BA.) 403.30p +1.92%
Meggitt (MGGT) 532.00p +1.14%
Amec (AMEC) 1,012.00p +1.10%
Associated British Foods (ABF) 1,761.00p +1.03%
Morrison (Wm) Supermarkets (MRW) 267.40p +1.02%
Sainsbury (J) (SBRY) 376.50p +1.02%
ITV (ITV) 139.10p +1.02%

FTSE 100 - Fallers
Aggreko (AGK) 1,660.00p -5.25%
United Utilities Group (UU.) 692.00p -4.75%
Severn Trent (SVT) 1,696.00p -3.91%
Polymetal International (POLY) 614.50p -3.68%
Eurasian Natural Resources Corp. (ENRC) 223.40p -2.70%
Fresnillo (FRES) 1,045.00p -2.61%
Tate & Lyle (TATE) 818.50p -1.98%
Kingfisher (KGF) 348.60p -1.83%
Prudential (PRU) 1,068.00p -1.75%
BT Group (BT.A) 313.70p -1.75%

FTSE 250 - Risers
Micro Focus International (MCRO) 709.50p +9.66%
SDL (SDL) 293.50p +8.30%
Imagination Technologies Group (IMG) 324.20p +6.23%
Spirent Communications (SPT) 135.40p +3.83%
Informa (INF) 495.10p +3.64%
Dignity (DTY) 1,433.00p +3.62%
Daejan Holdings (DJAN) 3,700.00p +3.58%
Chemring Group (CHG) 274.50p +2.96%
Rank Group (RNK) 156.50p +2.96%
Home Retail Group (HOME) 133.70p +2.93%

FTSE 250 - Fallers
New World Resources A Shares (NWR) 80.00p -12.52%
PZ Cussons (PZC) 372.90p -5.59%
Telecity Group (TCY) 960.50p -3.85%
Playtech (PTEC) 614.00p -3.76%
Electrocomponents (ECM) 247.50p -3.36%
888 Holdings (888) 148.00p -3.14%
Lancashire Holdings (LRE) 759.50p -2.94%
Hochschild Mining (HOC) 201.80p -2.70%
Kazakhmys (KAZ) 291.20p -2.61%
Man Group (EMG) 87.40p -2.40%

FTSE TechMARK - Risers
Ark Therapeutics Group (AKT) 0.45p +4.71%
CML Microsystems (CML) 474.50p +2.37%
XP Power Ltd. (DI) (XPP) 1,228.00p +2.33%
Wolfson Microelectronics (WLF) 167.00p +1.83%
Antisoma (ASM) 1.68p +1.52%
Kofax (KFX) 328.50p +1.39%
Microgen (MCGN) 155.50p +0.65%
Consort Medical (CSRT) 798.50p +0.44%
E2V Technologies (E2V) 118.75p +0.21%
Xaar (XAR) 805.00p +0.06%

FTSE TechMARK - Fallers
Emblaze Ltd. (BLZ) 49.50p -3.88%
Puricore (PURI) 39.00p -3.70%
NCC Group (NCC) 115.25p -2.33%
Skyepharma (SKP) 53.50p -2.28%
Torotrak (TRK) 25.50p -1.92%
Promethean World (PRW) 13.00p -1.89%
Ricardo (RCDO) 404.50p -1.22%
BATM Advanced Communications Ltd. (BVC) 16.62p -0.75%
RM (RM.) 69.00p -0.72%
Phoenix IT Group (PNX) 159.00p -0.16%

AB

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