September 17, 2014 / 8:11 AM / 5 years ago

FTSE underperforms as Scottish uncertainty weighs on market

LONDON (Reuters) - Britain’s top share index slipped and underperformed gains on rival European bourses on Wednesday, as the uncertainty raised by Scotland’s vote on independence pegged back the UK stock market.

People pass electronic information boards at the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth

The blue-chip FTSE 100 index closed down by 0.2 percent, or 11.34 points, at 6,780.90 points.

Engineering conglomerate Smiths Group was the worst FTSE stock in percentage terms, falling 6 percent after it reported a steep fall in annual profits and said it was not planning to sell its medical unit

The FTSE was the only major European stock market to fall into negative territory, underperforming advances of 0.3 percent on Germany’s DAX and 0.5 percent on France’s CAC.

European equity traders took encouragement from gains on Wall Street, which rose on speculation that the U.S. Federal Reserve will maintain a pledge on low interest rates later in the day.

However, traders saw the Scottish vote - due on Sept. 18 with the results out the following day - as preventing the FTSE latching onto the progress made elsewhere in Europe.

“The market is expecting a ‘No’ vote against Scottish independence, but no-one really wants to get too involved in the market ahead of the Scottish vote,” said Strand Capital managing director Kyri Kangellaris.

The “No” campaign favouring Scotland staying in the United Kingdom was 4 percentage points ahead of the “Yes” campaign in favour of independence, three different opinion polls showed, although the final result is still seen by some as too close to call.

“Until clarity emerges well after the vote ... it may be prudent for investors to hedge their exposure to UK debt and equities,” said Viktor Nossek, head of research at Boost ETP, a provider of exchange traded products (ETPs).

Richard Griffiths, associate director at Berkeley Futures, said: “I think it will be a ‘No’ vote. If it’s a ‘No’ vote, expect the FTSE to go up by around 50 points, but if it’s a ‘Yes’ vote, expect the FTSE to fall 200 points.”

Additional reporting by Francesco Canepa; Editing by Toby Chopra/Ruth Pitchford and Ralph Boulton

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