MPC minutes to come under microscope

Uncertainty ahead of last night's policy decision by the US Federal Reserve saw London's blue chip share index slip into the red yesterday despite having stayed in positive territory for much of the session.

Monday's rally was put on hold as investors waited to hear the US central bank's pronouncements on the state of the world's largest economy.

The FTSE 100 Index had soared by 1.7 per cent on Monday, pushing past the 5,600-barrier for the first time since late April, but yesterday fell 26.35 points to end the day at 5,576.19.

The Dow Jones Industrial Average on Wall Street had dropped into red in early trading, dragging the Footsie down, despite encouraging news that the construction of US homes and apartments rose last month to the highest level since April.

Monday's optimism had seen the Dow soar by 1.4 per cent in the previous session to reach its highest close since 13 May.

Speaking before last night's Federal Reserve announcement, Anthony Grech, head of research at IG Index, said: "Markets still seem well poised to continue their push upwards to fresh four-month highs as the week goes on."

He said investors in the UK would be closely scrutinising the minutes of the Bank of England's monetary policy committee latest meeting, which will be published today, for clues as to any further quantitative easing.

The dollar weakened due to volatility surrounding the Fed's decision, with the pound and euro gaining ground against the greenback. Sterling edged a wee bit higher to $1.56.

Among stocks in London, one of the biggest gains came from Cairn Energy after an update on its exploration activities off the coast of Greenland.

While the Edinburgh-based company abandoned one of its wells because it does not have commercial gas, shares rose 2 per cent or 9.7p to 436.5p after analysis of hydrocarbons from another site confirmed the presence of two oil types.

Lloyds Banking Group lost some of Monday's 3 per cent gain, which came after the bank announced that chief executive Eric Daniels was planning to retire next year. The part-nationalised bank's shares closed down 0.5p to 76.9p.

Supermarkets also shed some of the gains amassed on Monday, with the benefits of a positive broker note on the sector fading away. Tesco eased 4.5p to 433p, Sainsbury's slipped 2.3p to 391.8p and Morrisons was 1.8p cheaper at 304.5p.

In another quiet session for corporate results, JD Sports Fashion took centre stage with a 36 per cent rise in half-year profits to 19.3 million.

The figures were ahead of expectations and shares rose despite the company giving an uncertain outlook for trading prospects going forward.The stock finished 26.5p higher at 849.5p - a 3 per cent rise.

Also in the second tier, shares in oilfield services provider Wellstream rocketed by 29 per cent after it revealed a number of takeover approaches.

The stock rose 176p to 785p and helped FTSE 250 peer John Wood Group also make gains, ahead 25.6p to 416.2p as traders saw Wellstream's news as a sign of the potential for mergers and acquisitions in the oil and gas service sector.