London shares close lower ahead of Bernanke speech

London shares closed lower on Thursday amid growing anxiety ahead of a keynote speech on Friday by US Federal Reserve Board chairman Ben Bernanke, traders said.

The benchmark FTSE 100 index ended the day down 24.08 points or 0.42 percent at 5,719.45.

An Italian bond auction produced lower yields but failed to impress investors, despite Prime Minister Mario Monti's claim that the markets are recognising his government's economic reforms .

"Rome may have been able to sell off government debt this morning at a lower level than in recent auctions, but it appears that everyone is opting to wait and see whether Ben Bernanke will deliver the goods tomorrow in his speech at Jackson Hole," said Chris Beauchamp, market analyst at IG Index.

US consumer spending came in as expected while jobless claims were unchanged at 374,000, perhaps the worst result, since it neither indicates an improving economy or boosts the case for more Fed stimulus, he said.

"The weight of expectation surrounding tomorrow's speech means that Mr Bernanke will have to drop some fairly strong hints if markets are not to snub their noses at his words and drop back from their recent highs," Beauchamp said.

Miners again took the brunt of the selling in the wake of falling commodity prices and gloomy recent predictions about future demand.

Kazakhmys was the worst hit, sinking 4.94 percent to 586.50 pence following negative broker comment. Anglo American dropped 3.44 percent to 1,753.50 pence, BHP Billiton lost 3.26 percent to 1,842 pence and Vedanta fell 3.15 percent to 357.45 pence.

Glencore shed 3.00 percent to 357.45 pence as Qatar Holding, one of the biggest holders in Xstrata, said it opposes the terms of the Swiss miner's proposed merger with the commodities trader and will vote against the deal.

Supermarket group William Morrison was the main gainer, adding 1.52 percent to 281 pence.

Sterling eased to $1.5784 at 4:22 pm from $1.5841 on Wednesday evening but was steady at 1.2630 euros versus 1.2632 euros a day earlier.

Source: http://news.yahoo.com/london-shares-close-lower-ahead-bernanke-speech-163021700.html

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