The FTSE 100 continued its decline this morning, falling by 0.5% in early trading as hopes faded that Federal Reserve chairman Ben Bernanke would indicate plans for a third round of quantitative easing (QE) at a key speech later today.
The blue-chip index declined by 23 points to 5,107, extending yesterday's 74.75 point fall, ahead of a speech by Bernanke at a Fed conference in Jackson Hole, Wyoming, at 3pm UK time.
"All eyes are towards Jackson Hole and Bernanke and what he may propose, there has been a lot of nervousness over whether QE3 will be introduced. There had been hopes earlier in the week and now the market is becoming concerned that we are not likely to see a major development," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
The market appeared to be unaffected by the release of the Office for National Statistics second GDP estimate for the second quarter, which, as generally expected, reiterated that the British economy grew by 0.2% over the period.
After declining more than 10% in the past two days, Admiral Group's investors decided that perhaps the car insurer had been punished enough over concerns that a likely ban on referral fees on personal injury claims and a rise in the group's loss ratio. Admiral topped the FTSE 100 risers in early trade, rising by 37p, or 2.89%, to 1,316p.
Venture capital group 3i was the second biggest blue-chip riser, increasing by 1.7% to 211.7p, after newspaper reports that the group could be the subject of a takeover bid.
Amec, the engineering firm, was the biggest decliner, tumbling by 4% to 840p after Societe General cut its rating on the stock from "buy" to "hold".
