UK stocks down on Bernanke worries

Oil stocks,whose performance is correlated to growth,took the most points off the index.

Britain8217;s FTSE 100 fell early on Friday for the second consecutive day as investors8217; expectations waned that Federal Reserve Chairman Ben Bernanke would indicate further quantitative easing measures to prop up the US economy.

Oil stocks,whose performance is highly correlated to economic growth,took the most points off the index,continuing their slide from the previous session,with the FTSE integrated oils down 1.1 percent.

Bernanke,scheduled to speak at a Fed conference in Jackson Hole,Wyoming,at 1400 GMT,seems unlikely to announce another round of quantitative easing,but may acknowledge weakness in the US economy and indicate smaller stimulus steps to help the flagging recovery.

The Fed8217;s last quantitative easing programme ended in June and investors have been hoping that more stimulus measures will be introduced following recession fears triggered by a slew of weak US economic data.

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,Keith Bowman,equity analyst at Hargreaves Lansdown Stockbrokers,said.

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.

The UK benchmark index FTSE 100 index was down 43.67 points,or 0.9 percent to 5,087.94. It has lost 16.4 percent during a July-August sell-off kicked off by worries about the global economic environment and the debt situation in the United States and euro zone.

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Investors will get some clues about the health of the U.S. economy with U.S. preliminary second-quarter GDP figures due at 1230 GMT.

Before that traders will be watching UK second-quarter GDP at 0830 GMT for any signs of weakness in the economy.

UBS has downgraded its UK GDP growth forecasts for 2012 to 1.5 percent from 2.1 percent on growth concerns about the euro zone.

The key driver for revisiting our numbers is a large downward revision for the euro area: the 2012 GDP growth forecast has been slashed from 2 percent to 1 percent for the single currency region,UBS analysts say in a note.

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A broker downgrade to hold from buy hit shares in life insurer Resolution while engineer AMEC was down 4.3 percent,the third biggest faller,after Societe Generale cut its rating on the British engineer to hold from buy.

Merger and acquisition speculation helped 3I Group rise 2.5 percent to make it a stand out gainer with the Daily Express saying a possible buyer could be American buyout firm KKR at 300 pence a share.

Volume was strong at 73.1 percent of the private equity firm8217;s 90-day daily average.