London - Britain's top share index edged higher on Wednesday, recouping some of the previous session's losses, but with gains seen capped until after the US Federal Reserve's policy meeting.
The Fed is widely expected to reduce its $85 billion in monthly asset purchases - Reuters polls suggest by $10 billion - after UK markets close on Wednesday, although some traders are positioning themselves for a smaller number.
“The market is priced for $10 billion... but I think there's more chance that they taper less than expected or not at all, given recent mixed data, rather than deliver, say, a $15 billion taper, and that continued stimulus would boost the FTSE,” Mike van Dulken, head of research at Accendo Market, said.
“The Fed has been focussed on taking the froth out of the market, however, so they may use the wording to balance things out.”
Hi-tech engineering company Smiths Group rose 3.1 percent, the top FTSE riser, after annual results revealed a slight rise in profits and an unexpected special dividend.
“The FY13 results appear broadly in-line with expectations, but there is a special dividend of 30p that is likely to be well-received,” analysts at Jefferies said in a note.
United Utilities was also a strong gainer, up 0.9 percent, with British media reporting that the stock was subject to take over chatter.
Barclays was among the top traded stocks, with volume of 34.1 percent of its 90 day average, compared with 12.9 on the broader index. The share went ex-rights on Wednesday.
The bank traded at 280 pence, representing a 1 percent rise based on its theoretical ex-rights price (TERP) of 276.3 pence, but down 6 percent from its previous close at 299 pence.
The technical drop in Barclays' price took 10.6 points off the FTSE 100, causing it to trade flat in percent terms at 6,571.06, a 0.89 point rise.
The index had dropped 0.8 percent in the previous session, off of 1-1/2 month highs.
Ioan Smith, director at KCG, said that the next resistance for the index was at 6,700, around the previous July high, while support was seen for the index just above 6,350, at the 200 day moving average.
Ex-divs trimmed 0.36 points of off the FTSE 100 on Wednesday, as Antofagasta, Melrose and Petrofac all traded without entitlement to their latest dividend payout. - Reuters