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U.K. Stocks Decline Before Federal Reserve Decision

Sept. 18 (Bloomberg) -- U.K. stocks declined for a second day as investors awaited the Federal Reserve’s decision on whether it will start reducing the size of its monthly bond-purchase program.

Aberdeen Asset Management Plc slid 3.5 percent as Morgan Stanley lowered its 12-month price estimate on the shares. Smiths Group Plc climbed to its highest price since February 2011 after announcing a special dividend. Lloyds Banking Group Plc followed a gauge of European banks higher.

The FTSE 100 slipped 11.35 points, or 0.2 percent, to 6,558.82 at the close of trading in London. The equity gauge has still rallied 8.8 percent from a June 24 low as Chinese economic reports beat estimates and central banks pledged to leave interest rates at record lows. The broader FTSE All-Share Index lost 0.3 percent today, while Ireland’s ISEQ Index dropped less than 0.1 percent.

“Market participants do not have all their chips on the table today, grinding out the day cautiously before we hear from the Fed,” Ishaq Siddiqi, a market strategist at ETX Capital in London, wrote in a note. “Most expect the central bank to initiate the first round of tapering today, despite the fact that momentum in the U.S. labour market is evidently slower than the Fed hoped.”

The Federal Open Market Committee ends a two-day policy meeting today, at which officials will probably decide to lower its $85 billion of monthly bond purchases. Data this month showed U.S. payrolls and retail sales missed economists’ forecasts, while manufacturing grew faster than estimated.

Taper Forecasts

Of the 64 economists surveyed by Bloomberg News, 33 forecast the Fed will reduce its $85 billion in monthly asset purchases by $5 billion or less. Another 31 predicted cuts of $10 billion or more.

In the U.K., minutes from the Bank of England showed that every member of the Monetary Policy Committee agreed at the Sept. 3-4 meeting to keep stimulus measures unchanged.

The volume of shares changing hands in FTSE 100-listed companies was 16 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

Aberdeen lost 3.5 percent to 367.3 pence as Morgan Stanley lowered its 12-month price forecast on Scotland’s biggest money manager to 407 pence from 435 pence, citing concern over the performance of its global-equity and emerging-markets funds.

Crest Nicholson Holdings Plc declined 2 percent to 326.9 pence after Varde Partners Inc. and Deutsche Bank AG sold a combined 33.9 million shares -- a 13.5 percent stake -- in the U.K. homebuilder for 320 pence apiece.

Smiths Gains

Smiths Group climbed 2.6 percent to 1,412 pence after saying it will pay a special dividend of 30 pence a share, or 118 million pounds ($188 million). Full-year sales rose 2 percent to 3.11 billion pounds, the company said in a statement.

Lloyds advanced 2.1 percent to 76.25 pence and Standard Chartered Plc added 1.4 percent to 1,514 pence. A gauge of lenders posted the second-best performance of the 19 industry groups in the Stoxx Europe 600 Index.

Fiberweb Plc jumped 6.9 percent to 102.5 pence, its highest price in six years, after the U.K. maker of fabric for diapers accepted a takeover offer of 103.2 pence a share from Polymer Group Inc.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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