LONDON UK equities closed slightly lower on Wednesday as investors awaited clarity from the U.S. Federal Reserve over the future of its monetary stimulus programme.
All eyes will be on Fed Chairman Ben Bernanke's news conference, due at 1900 BST, in which he is expected to give guidance on the outlook for its quantitative easing programme.
While the expectation is that the U.S. will continue with its asset purchase programme at least until September, investors traded cautiously.
Minutes from their most recent meeting showed Bank of England policymakers acknowledged that further market volatility could be on the way because of uncertainty about the direction of U.S. monetary policy.
The threat of an early withdrawal by the Fed has seen the FTSE 100 fall almost 7 percent since mid-May.
London's blue chip index closed down 25.39 points, or 0.4 percent at 6,348.82, with banks and miners among the top fallers.
Experian, Land Securities, Severn Trent and United Utilities weighed on the FTSE 100 as they traded without the rights to their latest dividend.
BT Group fell 1.8 percent as the telecoms firm announced chief executive Ian Livingston will step down.
Broker Liberum said Livingston's departure would prompt short-term uncertainty for investors, with some fund managers wary of replacement Gavin Patterson.
Heavyweight telecoms firm Vodafone shed 1.6 percent on talk it could offer up to $10 billion for Germany's No. 1 cable operator Kabel Deutschland in an attempt to trump rival Liberty Global.
Defence firm BAE Systems rose 1.9 percent after media reports of potential Gulf orders worth up to 5 billion pounds ($7.80 billion), and after the head of rival EADS left open the possibility of a tie-up, traders said.
Despite near-term instability, equity investors remain optimistic over the outlook for the market, with the FTSE expected to top 6,700 by the year-end, a Reuters poll found.
"Central bank policies are focusing on growth, and as such we believe that quantitative easing will continue. Such monetary policies will provide a further boost to equities," Gayle Schumacher, head of investment office at Coutts said.
(Reporting by David Brett; Editing by Louise Heavens)
Our top photos from the past week.