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FTSE-100 index mixed as interest rate fears niggle

LONDON: The FTSE 100 ended modestly higher on Wednesday, although decliners were in the majority, as the market worried about Thursday's UK rate decision, and trading was concentrated on stock specifics, dealers said.

The FTSE's 13.9 point gain to 6,532.8 far from reflected the high-contour texture of trading in individual blue-chips.

Dixons Plc lost a fifth of its value amid intensifying margin fears, and took seven points off the index, while British Sky Broadcasting Plc surged 7.2 percent. The outcome of the Bank of England's two-day meeting would keep investors cautious ahead of Thursday's noon decision, but business was brisk and turnover reached 1.5 billion shares.

"A quarter or a half point on rates is not that material and is discounted already. The worst outcome would be if the Bank (of England) did nothing and was seen as being behind the curve," said ABN Amro strategist George Hodgson.

"The market is going to be corporate newsflow driven over the next few weeks with the reporting season coming up and trading statements. We're expecting reasonably positive company news and the market should advance from here, the end of year froth having been blown away," said Hodgson.

Chartists were less optimistic and said that continued weakness in the U.S. bond market would keep the market vulnerable.

"We look for a test on 6,523 (resistance) and 6,420 (support) over the next few days," said Royal Bank of Scotland technical analyst Brian Kiely.

"Any renewed weakness in the U.S. market would open the way to 6,250 and 6,079," he said. But despite bond market nerves, the Dow Jones average managed to climb 50 points by the London close, and Nasdaq -- having dropped as much as two percent in the final half hour of the UK session -- traded near break even by 1703 GMT.-Reuters