LONDON MARKETS: FTSE 100 Slips Ahead Of Jobs Data, Budget, BOE Minutes

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- London's FTSE 100 index moved cautiously lower at the open on Wednesday ahead of a busy day in the U.K, with the release of unemployment data, the latest Bank of England minutes and the U.K. government's budget for the coming year.

The benchmark fell 0.2% to 6,594.11, paring back after a 0.6% advance on Tuesday.

Posting one of the biggest losses in the FTSE, shares of Smiths Group PLC slid 5% after the engineering company said profit fell in the first half of its fiscal year, but that it expects improved trading in the second half.

Shares of HSBC Holdings PLC (HSBC) gave up 1% after Credit Suisse cut the banking heavyweight to underperform from outperform. The analysts said they were disappointed the group hasn't been able to capitalize on its strengths "in terms of funding, liquidity and exposure to global trade." Instead, the Credit Suisse analysts prefer Standard Chartered PLC in the U.K./Asian banking space. Standard Chartered shares slipped 0.1%.

Also declining, Antofagasta PLC slumped 5.6% after Credit Suisse cut the miner to underperform from neutral.

More broadly in the U.K., investors waited for a trio of political and macroeconomic events. At 9:30 a.m. in London, or 5:30 a.m. Eastern Time, the U.K. unemployment rate for the three months to January is out, expected to show no change at 7.2%. That means the "old" Bank of England forward guidance from August stays in place, as the 7% threshold for considering a rate hike won't be reached.

Also at 9:30 a.m. in London, the minutes from the BOE's March meeting are published. Economists expect all nine of the central bank's policy makers voted unanimously to keep interest rates at a record low of 0.5% and maintain QE at 375 billion pounds ($622 billion).

Later in the day, U.K. Chancellor of the Exchequer George Osborne presents his annual budget to the House of Commons. Markets will be looking for new growth and deficit forecasts, as well as for spending initiatives. Osborne has hinted that the budget will include measures to boost business investment, which is considered a missing piece in the U.K.'s recovery. The finance minister is further expected to confirm that spending cuts will be needed until well after the 2015 election.

Philip Shaw, chief economist at Investec Securities, said in a note that there are also hopes that Osborne will reveal tax cuts, but that such hopes are likely to be dashed.

"The deficit remains at elevated levels, and major tax cuts at the halfway point in the fiscal adjustment cycle would in our view be completely inappropriate," he said.

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